Bubbles in various real estate markets around the world, some of which may be popping at this very moment. Jumpy energy markets, accompanied by a chorus of voices asking, ''Are we running out of oil?''
Strains on the budget of the U.S. government, and on the balance sheets of U.S. households, both bedeviled by what looks like chronic spending beyond their means. The threat of an avian flu pandemic, heightened by recent word from a United Nations official that the world is ''losing the battle'' against the virus in poultry.
A tottering pension system, simultaneously suffering from symptoms of not enough savings and too much. China.
''At present, the biggest risks are the economic meltdown scenarios, the most dangerous of which could include a period of extended and substantial deflation,'' says the No-Load Fund Analyst newsletter in its December issue. ''We view this risk as real but remote enough so that we are not aggressively hedging against it.''
The question for mutual-fund investors is not whether these hazards exist, but what to do about them. Denying their existence isn't an appealing option. Neither, at the other extreme, is letting them frighten you into paralyzed indecision.
The mission, then, is to muddle through somehow in the middle. Fortunately, there are strategies available to help us travel this perilous path.
First among these is diversification. Heard for the millionth time in investment discussions, the word can sound like an airy abstraction. So let's talk specifics.
No matter what calamities do or don't befall us, stock and bond prices and interest rates can do only three things - rise, fall or stay about the same.
Using mutual funds and/or their up-and-coming competition, exchange-traded funds, investors can set up an asset-allocation plan intended to take all these possibilities into account. Funds afford a crucial measure of diversification by investing across a range of individual securities.
Optimists can go heavy on stock funds - maybe even on aggressive growth-stock funds. Pessimists can go heavy on bonds or money markets. If that's not cautious enough for you, there are other options such as gold. Twenty-one precious-metals mutual funds tracked by Bloomberg have treated their faithful to an average annual gain of 30 percent over the past five years.
On the negative side, gold isn't exactly cheap, having almost doubled since 2001. If bad things fail to happen, sooner or later this safe-haven investment could encounter some stormy times of its own. But hey, that's just one more risk to be managed.
Axiomatically, there is no such thing as a perfect hedge. Sometimes diversified investors must face simultaneous trouble in a variety of markets. On the other hand, pleasant surprises are possible as well.
Note the friendly fate that awaited investors over the past year and a half who hedged their interest-rate bets by splitting their money between bond and money-market funds. Returns on money funds surged from less than 1 percent to almost 4 percent, in some cases, as the Federal Reserve raised short-term interest rates.
Yet bond prices didn't fall as one might expect them to do on a rise in interest rates. Longer-term rates have held steady since mid-2004. From June 30, 2004, through Dec. 21, a representative bond fund, the Vanguard Long-Term Bond Index Fund, posted a healthy 8.3 percent annualized return, according to Bloomberg data.
There is the threat that the rise of China will lead at some point to serious problems - fast-growing economies are always susceptible to growing pains. There is also the chance that it will keep opening up new avenues to prosperity. Diversified investors aim to take account of both risks. They may be especially well-positioned if, as so commonly happens, what ultimately develops is a messy mixture of good and bad.
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Chet Currier is a Bloomberg News columnist. He can be reached at ccurrier@Bloomberg.net.
