Dial Down Your Risk

To keep losses to a minimum, look at asset-allocation funds.

Brutal as the 2000-02 bear market was, at least big chunks of the market were in the black. Value-oriented funds (particularly ones investing in small companies) and bond funds earned decent returns for most of the period. That took some of the sting out.

Smaller holes. Of the funds that made money every calendar year from 2000 through 2007, just about all are losing money in 2008. But most of them are running below-average losses. Losing just a little when the overall market is down 30% or 40% is great. A fund suffering smaller losses can quickly recoup them, whereas other funds will need years to break even.

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Russel Kinnel
Contributing Editor, Kiplinger's Personal Finance