Q. I have been self-employed for 25 years and have never been comfortable in the stock market. I had some money in mutual funds but pulled them when the economy began to tank. I have a little money in IRAs that I have re-directed to money market funds for the time being. I read your column regularly and know that you value TIPS investments. Do you still feel that way and, if so, would it be better for me to go through someone like Edward Jones or to purchase them myself at next year's auction?

I normally purchase CDs and then live within my means. Is there any other form of investment you would recommend? ---F. S., by email

A. Here’s an old joke: What does capitalism have in common with a bicycle? Answer: They only work when they are in motion.

Right now the bicycle of capitalism isn’t moving because of a total failure of national leadership at the political and business level. The consequence is the trust that literally makes the world work has ceased to exist. In this environment the only “safe” place for your money is in U.S. Treasury obligations, and that’s where all the money is going, witness the extremely low yields on Treasury securities.

I don’t think any novice investor, should be buying any kind of security in the retail resale market. There is simply too much opportunity to get skinned. What you can do, within the limit of how much you are allowed to buy, is put some money in I Savings Bonds from your taxable accounts and invest in a TIPS fund in your tax-deferred accounts.

TIPS have tumbled in recent months because investors’ inflation expectations have fallen dramatically. I still believe, however, that any time you can get a real return, after inflation, of 2 percent, TIPS are a reasonable buy. Recently, the 5-year TIP was yielding 1.3 percent real, while the 10-year TIP was yielding 1.7 percent real. That’s about the same as the yield to maturity on conventional Treasuries that have no inflation protection.

We may be deflating at the moment, but government is moving very quickly to “reflate.” That’s why I think inflation protection is still a great idea.

Q. At the age of 71 I hope to live to be at least 90. Should I hold on to my foreign securities? I own Fidelity Spartan International Index Fund, presently down about 48.5 percent. I also own Vanguard International Equity Index Fund and Vanguard Emerging Markets ETF. The ETF is down about 58.5 percent. I really do not need any more capital losses, because I’ve got so much in losses to carry forward already. ---B. N., by email from Austin, TX

A. Whatever your age, a 50 percent loss provokes words like “devastating.” But while every investor would far prefer to have a looming capital gains tax to pay, this is a good time to start thinking about how to find the lemonade in the lemons.

Here are some of the under-recognized “benefits” from this steep decline:

  1. Many funds have loss carryforwards and unrealized losses that will eliminate any capital gains distributions for years. This amounts to a de facto tax cut on future investment returns. That’s a good thing. Think of it as legislation from Mr. Market. You may not “need” more capital loss carryforwards, but they still make international investing relatively attractive to other investors.
  2. By selling one broad international fund and buying another, you can realize capital losses and carry them forward to provide tax savings on other income sources, albeit limited to $3,000 a year--- unless Congress begins to show signs of intelligent life.
  3. International equities are selling at lower valuations than domestic equities. A recent multifactor ranking of valuations around the world done by the Leuthold Group, for instance, showed that the U.S. market was more expensive than 40 of the 45 ranked markets. That suggests that international equities may offer the larger opportunity.

Put that together and it’s time to hold or buy more. It’s not time to sell.