Expert: Paul Henneman - 3/22/2006

Question
Much is being reported as to how devastating the enevitable avian flu pandemic will be to the  world economy. Just how can one preserve assets? Is anything other than cash or precious metal absolutely safe? Which is safest - treasury bonds/bills, FDIC insured CD offered by financial institutions & banks, savings accounts or money market funds in larger banks,annuties, real estate? With the inevitible recession, or worse,I want to park eveything in a safe place if need be.

Answer
Oliver,
   Thank you for your question! I would honestly not worry about this. While the avian flu has received a huge amount of press, the experts say that there is a one in a million chance that the flu will jump from birds to people and become contagious.
   However, if it does happen, it is very difficult to say exactly what effect it would have on economies. If you are truly worried about this then I would suggest diversifying your investments into a combination of what you ask about. Cash, gold, and fixed income investments in solid economies would round out a good portfolio to protect wealth. You should consider putting these investments in different countries as well, for example some investment in foreign stocks through stable, large, and reputable companies. Real estate will always be an important part of a diversified portfolio, this can be done by purchasing real estate oriented stocks such as home builders, or REIT's. My main point would be that you would not want to do just one thing, but spread your investments out among at least several if not more different things. Even an FDIC insured money market account would be good. Backed by the government and assuming usually just enough interest to barely beat inflation, a money market account could protect your wealth, unless the economy broke down to the point that the government could not meet its obligations to insure your deposits. This is so unlikely that I would not really consider it as a possiblity. Also keep in mind that FDIC insurance on your deposits are often limited to $100,000, which may or may not be a big concern for you.
   If you feel strongly about this, you should perhaps think about investing in the companies that would benefit monetarily from such an outbreak such as vaccine manufacturers if there are any that are publicly traded, or other health care institutions. Even companies such as needle manufacturers and other basic medical supply companies.
   Again I want to stress that I do not believe that this is something that should affect any investors actions. I provide the above suggestions in case you feel otherwise, and are truly worried about an epidemic. Perhaps you know something about it that I do not!
   I hope that this is somewhat helpful, please do not hesitate to follow up with me if I can be of any further service,

Sincerely,
Paul Henneman
President
ValuEngine, Inc.
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