Investors have options in this treacherous environment.
As a professional who has provided clients with financial advisory services for several decades, I find today's investment environment entirely unique.
I struggle to remember a time when economically sensitive investments, such as stocks, rally so frequently on what has traditionally been interpreted as bad news. For instance, Federal Reserve Chairman Ben Bernanke caught many market experts off-guard by announcing that there would be no change in the Fed's quantitative easing program.
This decision was made because the economy is frail. The Federal Reserve is seeing the same things most Americans are experiencing first hand: a weak labor market, lackluster economic growth, inadequate leadership in Washington and a severe lack of confidence.
While the Federal Reserve's quantitative easing program has coincided with higher stock prices, the simple fact that the Fed feels the need to pump trillions of dollars into the financial system is of concern. We could argue over the potential implications of this experiment and try to predict how this story ends, or we can admit that it's largely unknowable.
(Read more: What is quantitative trading?)
If we take a step back, it's obvious that, whether or not stocks move significantly higher or lower from this point, the current status of our economy is alarming enough to warrant some of the smartest people in the world to believe it's in the country's best interest to continue purchasing $85 billion of securities per month. That makes me a bit nervous and hesitant to dive head first back into risky assets.
So where does a cautious investor go?
Most bonds are offering what appear to be insultingly low yields. Even a simple suggestion that the Federal Reserve might begin to slightly taper its monthly purchasing program sent rates soaring and bond prices tumbling earlier this summer. I can only imagine what bond prices will do once quantitative easing actually starts to unwind.
(Read more: Pros share best bond plays regardless of taper)
This is why many financial advisors are expanding their thinking by considering the many ways to win in this treacherous investing environment. First of all, financial advisors should know their client's individual goals and calculate a target rate of return. Identifying those objectives, especially the client's risk tolerance, should always be the first step, in my opinion.
After doing that, most people will fall somewhere between having an infinite time horizon with high tolerance for volatility and someone who needs to protect their assets completely.
It's imperative that investors know they have options across this spectrum. While advisors all have equity strategies that have experienced strong performance during this market rally, we find that most clients still seek out the comfort of protecting their assets against downside risk.
(Read more: Bill Gross is selling bonds. Should you?)