The wise King Solomon noted there is “a time to keep, a time to discard” — but how would he play today’s volatile markets? Would he maintain a fully invested portfolio (“keep”) or go to cash (“discard”)? What investing wisdom can be gained in a world of dizzying change?

An emerging consensus has it that we’re living in a new world with a “new normal” as PIMCO CEO Mohamed El-Erian puts it. Forbes columnist and Fisher Investments CEO Ken Fisher is prominent among those who dissent from this view, but assuming for argument’s sake that the world is changing in some significant way, how should that inform one’s investing decisions?

Perhaps the first principle we can apply to this question — and the only one that no one would disagree with — is that nobody knows for sure what the future holds; therefore, most people unwilling to bet all on a certain vision of the future must hedge to some extent. Or, as Solomon put it, “distribute portions to seven, or even to eight.” Judging from the wise king’s next words (“for you never know what calamity will strike the land”), it seems safe to say Solomon was thinking in terms of broader asset classes, i.e. if the land has a bad year, it will help to have commercial business interests, commodities, currency, etc.

Most of your clients own homes, have ties to one or more businesses (i.e. their jobs) and have some cash, so by the time they reach you — their investment advisor — your broader asset allocation advice is probably the most important thing you can do for them, i.e. making sure their wealth is divided among stocks, bonds, guaranteed investments, REITs, commodities — as appropriate to each investor, of course.

Nevertheless, the 2007-2009 market plunge was most notable for the paucity of places to hide, which some “New Normal” investors take to mean there are fewer meaningful diversification opportunities — a point disputed by new academic research. Defectors of the Ken Fisher camp might claim to have the wise King Solomon on their side (“there is nothing new under the sun”), but one might just as easily argue that the waxing and waning of economic might is itself an unchanging part of the condition of mankind.

In future editions of this weekly portfolio blog, we will try to apply some timeless principles to advisors’ portfolio questions. In the next edition, we will examine a portfolio diversifier that can offer significant protection against the kind of crash we saw in 2007-2009.