I am a strong advocate of the permanent portfolio, as recommended by Harry Browne in his little book Fail Safe Investing. For those not familiar, I recommend reading it and implementing it. To give a very brief summary of the permanent portfolio, it is a portfolio in which you divide up your investments as follows:
25% long-term government bonds
25% cash (or cash equivalents)
The idea of this portfolio is asset protection with some growth. It is highly diversified so that it will be protected (and possibly grow) in any economic environment. There are variations of the portfolio such as the permanent portfolio mutual fund (symbol: PRPFX), but the idea is still the same. The portfolio has done remarkably well over time with very few down years and significant growth.
One thing about the permanent portfolio (including the mutual fund) is that it has an inflationary bias. In other words, the portfolio performs much stronger in a highly inflationary environment. This is because of the 25% weighting in gold. The mutual fund is similar, with a small portion in silver. This is much higher than the typical investment advisor would recommend. It is surprising when you get an investment advisor recommending as much as 10% in gold or gold related investments.
This inflationary bias with the permanent portfolio is just as it should be. If you are in a period of deflation and falling prices, you don't need your portfolio to do really well. You just need it to stay the same and your purchasing power would be increasing due to falling prices. But in an inflationary environment with rising prices, you want your portfolio to be going up more than the price inflation rate.
If prices are going up at 10% per year, then you want your portfolio returning 15 or 20%. If prices are flat, then a return of 5% on your investments is reasonable. When looking at it this way, the permanent portfolio is even stronger than just looking at the charts (which is impressive anyway). The returns, when factoring in price inflation, are even more steady for the permanent portfolio.
I recommend having your core holdings in something that is set up similar to the permanent portfolio. I am not against speculating, but I think that should be done with "play money". There is nothing that is guaranteed in this world, but the permanent portfolio is the closest thing to safety as you will find and you may even get some decent returns with it.