The best place to have been invested since Aug. 2, when the Iraqis invaded Kuwait, is in cash -- Treasury bills, money market funds, certificates of deposit and so on.

Look at the evidence. None of the world's stock markets performed positively over the past four weeks (as computed in local currencies).

And of the world's government bond markets, only three performed positively: the United Kingdom, Australia and Canada. They not only had high double-digit interest rates on their bonds, but the countries are also rich in energy resources.

As far as the U.S. bond market goes, the price of oil is the key to longer-term rates. If the Middle East crisis is settled quickly and without war, then the price of oil should retreat and with it long-term interest rates. If the crisis drags on for several months, then the price of oil will creep higher and stabilize rates at around 9 percent to 9.25 percent. Should the crisis escalate into a shooting affair, it would not be unreasonable to assume that the oil facilities of Iraq, Kuwait and Saudi Arabia could be damaged, which would greatly curtail the flow of oil. Some analysts believe that oil would go then to a minimum of $40 per barrel and that 30-year Treasury rates could spike to 10 percent.

For investors, timing, as always, is crucial if you are attempting to invest when rates could move up. But for now the choice is easy: Stay in cash, or don't extend beyond two-year maturities.