Don't invest, that's the only way to guarantee no losses. If I knew otherwise, I'd be rich and out of here.
Lot of talk lately in the news about bear vs bull markets, whether bonds are "better" than stocks, if this is a recession or a just a market correction. It's taken a while for the consequences of ABCP to ripple through the economy. Not really a ripple now, more like a tidal wave, especially when you look at the TSX index - struggling up for the last 12 months only to crash down within the last few weeks back to the value it was last January. And I've been investing over the last year too, into a variety of funds and stocks - all well rated so I'll just ride for now. Funds cover a mix of countries and sectors, some are aggressive, some more balanced. Even a US value fund, to scoop all the bargains that have appeared. Stocks for gold and gravel, uranium and zinc, telephone poles and solar cell silicon, trains and molybdenum, diamond drilling and IED detection.
With all this unrest, papers are talking about the dreaded "r-word". For a while no one would say "recession" for fear of jinxing the economy. Now it's out in the open, and is part of the The Economist's "r-word' index. They count how often the word itself is mentioned in newspapers, and were successful in predicting the recessions of 1981, 1990, and 2001. It's up again, so we could be in trouble. Other writers say conditions are different, what we're going into now is stagflation - a stagnated economy along with inflationary prices. And to top it all off, there's a misery index. Coined back in the 70's, it's a product of the unemployment rate and the inflation rate.
Other market indexes are slumping too - there has been speculation of more decoupling of other markets from the US economy- that remains to be seen. Japan's Nikkei has dropped back down to where it was in October 2005 - but it's been sliding for the last 6 months anyways.
CBC News has an in depth article on bear and bull markets. If you're concerned about your mutual funds in a falling market, take a look at the numbers for the TSX 300 for the past 20 years:
Date range Type Months Return
Nov. 1987 - April 1998 Bull 125 247%
April 1998 - Sept. 1998 Bear 5 -26%
Sept. 1998 - Aug. 2000 Bull 23 106%
Aug. 2000 - Sept. 2002 Bear 25 -43%
Sept. 2002 - Sept. 2005 Bull 36 90%
For your funds, how well did they do in the past 2 bear markets? If they did well, do they have the same manager(s) or is there a new one? What history does he/she have?