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By Trebor Keidan

PHNOM PENH - Multiple attacks by international terrorists causing significant economic and human loss was just one of the risks facing the world in 2008, according to a report by the World Economic Forum.

The report, which was titled "Global Risks 2008" and was released ahead of the World Economic Forum in Davos in January this year, highlighted ‘‘the need for new thinking and concerted action''.

It stated that there was a five to 10 percent chance that ‘‘International terrorists mount multiple attacks with conventional and chemical (but not nuclear) weapons, causing significant economic and human losses and exacerbating the retrenchment from globalisation''.

And although the attacks by Islamic militants in Mumbai last week cannot be considered "multiple" (because they were launched in one location) they did cause significant human losses.

They also look likely to cause economic losses by hurting the country's tourism and other industries - in the short term at least.

Attacks of this magnitude will increase global uncertainty that has been brought about by the so-called credit crunch as well as market volatility and rising food prices.

For those of us living in Cambodia, this uncertainty has been compounded by events unfolding in Bangkok, with protesters managing to close off the country's main international airports.

These events have negatively affected businesses here - especially those connected to the tourism industry.

So with this in mind and all of this uncertainty, what should we, as investors, do?

Normally in times such as these, a lot is said about "flights to safety".  So to begin with, what exactly is a flight to safety (or quality)?

A flight to safety (or quality) is a movement by investors to buy higher quality securities (stocks, bonds etc) under the assumption that these will be safer investments. Such investments could be the "blue chip" stocks of solid companies with a track record of growth and dividends.

A flight to safety normally occurs during times of uncertainty brought about by financial crises or political uncertainty. And although now might just be one of those times, a flight to safety might not be the right answer. After all, with big businesses "going to the wall" when it comes to investing, who exactly can we trust?

Traditionally, the so-called safe-haven stocks are the stocks of companies that provide goods and services that people cannot simply do without.

These often include food, health and energy firms as well as tobacco companies.  

Others simply look to keep money in the bank, but again, be aware of high interest rates. As we have seen over the last months, no one is safe and even big institutions such as Lehman Brothers and Citibank are at major risk.

What we should do as investors is not allow greed to determine our strategy, but rather to take a more cautious approach and look for funds that are very well-managed and diversified, with managers that have a track record of investing in such economic climates. We should not be taking a short-term view as this could be disastrous. If our funds are needed in the short term, then we should keep them liquid and give up some growth for the safety of reduced volatility.

There are many ways of entering the markets from ETFs (exchange traded funds) to stocks, bonds and mutual funds. As most of us might already be aware, each of these options comes with its own set of rewards and risks, and, as always, one should consult a professional before jumping in.

And finally, when it comes to safe havens, who could possibly talk about the subject without mentioning gold? After all gold is THE traditional safe haven. And you can invest in gold by investing in funds or the physical metal.

Perhaps one of the easiest ways to invest in gold is to buy in Gold ETFs. One that is listed on the New York Stock Exchange is called SPDR GOLD SHARES (GLD). This ETF was released in 2004 and is designed to reflect the price of gold.

So as the events of last week showed - and the World Economic Forum report suggests - we are living in uncertain times.

Perhaps now is as good a time as any to take a look at our portfolio. After all, with the inevitable volatility that comes with the uncertainty, it could pay for us to be prepared.

Remember ...Your Money Matters!

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Trevor Keidan is managing director of Infinity Financial Solutions, a firm providing impartial,  tailor-made  personal financial advice to clients in Cambodia and Southeast Asia. Should you wish to contact Trevor, please send an email to [email protected].