Over the last 13 years, investors have experienced some of the largest financialbubbles in history. Asian currencies rose and fell, technology and Internet shares suffered staggering losses, oil and other commodities rode a wild roller coaster, and the collapse of the housing market caused trillions of dollars of damage.

Already, some see signs of new real-estate bubbles in markets like China, Australia, Canada and even smaller countries, such as Israel. Rather than aberrations, there's reason to think that financialbubbles have become more common.

And markets are more volatile -- as was evidenced on Friday when news reports of Securities and Exchange Commission charges against Goldman Sachs Group precipitated a sudden and sharp selloff.

How can investors deal with the new environment?

Analysts offer a range of suggestions, including dropping buy-and-hold strategies, holding more cash and purchasing a range of downside protection, such as options and so-called inverse exchange-traded funds.

Competitive Investing

Among the reasons so many markets are surging to sky-high levels before tumbling to painful depths: Investors are able to chase almost any kind of trade today, thanks to new products, such as ETFs. Pressure has never been greater for investment pros to keep up with competitors, encouraging them to ape their rivals' trades. Also, more pros have embraced 'momentum' investing, buying investments as they move higher, and selling them as they fall, to try to ride the moves.

Meanwhile, globalization and other developments have pushed inflation lower, encouraging central bankers to drop interest rates so low that many investors have turned to cheap borrowed money for their trades, fueling financialbubbles. The free-flow of trading information also may have made markets more volatile and prone to wild trading.

'The size of the bubble is in direct proportion to the ease with which news and rumors can be spread and the ease with which people can then trade on these rumors,' says Aswath Damodaran, a professor of finance at the Stern School of Business at New York University.

The new environment presents unique challenges. It's often hard to identify a financialbubble. The surge in gold over the past few years strikes some analysts as dangerous. Global markets often move in lockstep today, making it harder to avoid a sharp downturn.

But investors who adopt a perpetually worried outlook will miss out on big gains -- such as the 76% rise for the S&P 500 index since the market bottomed out just over a year ago.

Rather than predict how long markets will climb, or when they might tumble, a better idea is to embrace new strategies. For one thing, it's no longer safe to buy an investment and store it away. Taking profits after a big runup once was the mark of a timid investor; today, it's a sign of smarts.

'One of the lessons from 2008 is that buy and hold is a much riskier proposition,' says Jack Ablin, chief investment officer of Harris Private Bank.

Staying Liquid

Just as important, investors need to make sure they're not stuck in hard-to-sell holdings if they might need to raise cash in the short term. Too many investors were caught in 2008 in investments that turned out to be quite illiquid, such as high-yielding money-market funds that held risky debt.

Buying protection and having ample cash on hand also are musts. Some analysts recommend inverse ETFs, which provide a return that's the inverse of global markets or sectors. If markets tumble, these ETFs should rise in value.

An investor who is convinced that his portfolio will do well over the long haul and is willing" target="_blank" title="a.不愿意的；不情愿的">unwilling to sell shares, but is still worried about a short-term market tumble, might place 5% of the value of his portfolio in shares of ProShares Short S&P500, an ETF that climbs when the Standard & Poor's 500-stock index falls.

That could provide cushion in an abrupt tumble. Investors holding heavy doses of shares of smaller companies can purchase the ProShares Short Russell2000, which rises when the small companies in the Russell 2000 drop.

These ETFs sometimes don't track markets exactly, especially when trading gets volatile, so they're not a perfect solution.

Another option is to choose a 'tactical asset' or 'tactical-allocation' mutual fund, or one that shifts among various assets, in an attempt to avoid getting caught in a painful downturn. One example: the Pimco All Asset Fund.

Cash at the Ready

The simplest form of protection is holding ample cash. Today, money-market funds pay puny returns, but that's not a steep price to pay for both safety and the ability to re-enter a market after a tumble.

'Investors must be more willing to employ cash as a legitimate asset class,' says Mr. Ablin.

Investors need to have more cash on hand than in the past, argues Jeff Fishman, who runs JSF Financial, a Los Angeles-based financial-advisory firm.

In the past, he recommended that investors hold cash equating to three to six months of living expenses. But on the heels of the markets' turbulence over the past decade, he now advises they hold cash amounting to six to 12 months of living expenses, especially since banks have slashed or eliminated home-equity lines of credit to many individuals, something many relied on as a safety net.

Mr. Fishman is a fan of shorter-term tax-free bond funds, such as the Vanguard Short-Term Tax-Exempt Fund and the AIM Tax-Free Intermediate Fund, as good places to stash short-term funds.

GREGORY ZUCKERMAN

• financial [fi´nænʃəl] a.金融的，财政的 (初中词汇)
• protection [prə´tekʃən] n.警戒；护照；通行证 (初中词汇)
• pressure [´preʃə] n.压榨 vt.对...施压力 (初中词汇)
• investment [in´vestmənt] n.投资；(时间等)投入 (初中词汇)
• bubble [´bʌbəl] n.水泡 vi.冒泡；沸腾 (初中词汇)
• proportion [prə´pɔ:ʃən] n.比率 vt.使成比例 (初中词汇)
• finance [´fainæns] n.财政；金融 vt.资助 (初中词汇)
• identify [ai´dentifai] vt.认出；鉴定；验明 (初中词汇)
• embrace [im´breis] vt.&n.拥抱；采纳；信奉 (初中词汇)
• recommend [,rekə´mend] vt.推荐；使受欢迎 (初中词汇)
• cushion [´kuʃən] n.垫子，坐褥 (初中词汇)
• ability [ə´biliti] n.(办事)能力；才干 (初中词汇)
• willing [´wiliŋ] a.情愿的，乐意的 (初中词汇)
• roller [´rəulə] n.打滚的人；滚柱 (高中词汇)
• collapse [kə´læps] vi.&n.崩溃；病倒；衰败 (高中词汇)
• israel [´izreiəl] n.以色列 (高中词汇)
• commission [kə´miʃən] n.委任(状) vt.委任 (高中词汇)
• so-called [´sou ´kɔ:ld] a.所谓的，号称的 (高中词汇)
• painful [´peinfəl] a.痛(苦)的；费力的 (高中词汇)
• environment [in´vaiərənmənt] n.郊区；周围；条件 (高中词汇)
• unique [ju:´ni:k] a.唯一的 n.独一无二 (高中词汇)
• predict [pri´dikt] v.预言；预告；预示 (高中词汇)
• abrupt [ə´brʌpt] a.突然的；粗鲁的 (高中词汇)
• mutual [´mju:tʃuəl] a.相互的；共同的 (高中词汇)
• legitimate [li´dʒitimit] a.合法的 vt.使合法 (高中词汇)
• decade [´dekeid] n.十年(间) (高中词汇)
• experienced [ik´spiəriənst] a.有经验的；熟练的 (四级词汇)
• competitive [kəm´petitiv] a.竞争的，比赛的 (四级词汇)
• outlook [´autluk] n.眺望；景色；展望 (四级词汇)
• unwilling [ʌn´wiliŋ] a.不愿意的；不情愿的 (四级词汇)
• holding [´həuldiŋ] n.保持，固定，存储 (六级词汇)
• taking [´teikiŋ] a.迷人的 n.捕获物 (六级词汇)
• investor [in´vestə] n.投资者 (六级词汇)
• intermediate [,intə´mi:diət] a.中间的 (六级词汇)