Know When to Take Your Bets Off the Table

The volatility caused by the financial crisis has claimed the lives and fortunes of even the most savvy of investors -- German billionaire Adolf Merckle committed suicide this week after racking up huge investment losses, one of which was a wrong-way bet on Volkswagen that cost him an estimated $539 million. Even conglomerate CITIC Pacific got into trouble, announcing a $2 billion writedown after making bad bets on the Australian dollar.

With volatility likely to be a theme that will continue into 2009, the best way to protect your wealth would be to know when to take your bets off the table.

“Know when to cut either your profits or cut your losses…know when to exit your investments,” Benjamin Pedley, MD & investment strategist at LGT Investment Management said on CNBC Asia Pacific's "Protect Your Wealth".

(Watch video on the left)

Although he believes interest rates, which are largely heading towards zero around the globe, will help the equity markets to rally, he tells investors to take profits when they see a 15-20 percent bounce.

Watch out for the dollar too, Pedley cautions as “this will determine how a lot of other asset classes (will) perform this year”.

In the alternative investments space, he advises high-net-worth investors to look at CTA macro fund of hedge fund models as they performed well last year.

Comments? Questions? Send them in here.

Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."