"For years, corporate investors stuck to what were considered safe investments. Now we know that nothing is safe," says Lee Epstein, president and CEO of Money Market One, a broker-dealer based in San Francisco that specializes in corporate cash. "You have to consider that the unthinkable can happen. It's the new paradigm."

And that uncertainty has reduced cash investing to pure defense. Hoarding is still going on, says George Zinn, treasurer of $60 billion Microsoft Corp., which has one of the largest cash chests ($24 billion) in the corporate world. "We see it in corporations that have drawn down their credit lines even though they have no immediate use for the funds," he says. The turning point will come when de-leveraging has run its course and investors can stop selling good assets just to cover margin calls or get liquidity. "That is when stability will return, but nobody knows when that will occur," he says.

Or whether "stability" is an old-paradigm concept. Corporate investors are rethinking their perception of the banking and investment infrastructure and how markets work, Zinn says. "For at least 20 years, investors felt sure they could be generally successful buying the dip or sticking with asset allocation strategies based on mean reversion. Now investors are really wrestling with whether that reality still is relevant."

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