Is there any such thing anymore as a "safety stock?"
Tim Hanson, senior analyst at the Motley Fool: In the short-term, there is no such thing as a "safety stock." But that was never the case. If you're willing to take a long-term view, however, there is no better place for your savings than in the stock market. And despite recent volatility, that's still the case today. If you want a simple solution, then you should do just fine by sticking with an index fund such as Vanguard Total Stock Market (VTSMX).
But if you are looking to really take advantage of the current crisis, we've been telling our Motley Fool members to start increasing their foreign exposure as high as 50 percent to 70 percent. A host of other financial experts have also come out recently with similar recommendations. And that's because the nature of the global economy is changing. The U.S. is becoming less central to trade and development and countries such as China, India and Brazil are both growing faster and offer important diversification. Remember, if you're a U.S. investor, it's likely that the value of your savings, home, and job are all denominated in U.S. dollars and rely on the health of the U.S. economy. (Note: Hanson does not own shares of VTSMX.)
October 8, 2008; 7:00 AM ET
Categories: Your Pocketbook | Tags: stocks
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