NEW YORK (CNN/Money) - In light of the situation in Iraq and the general instability in the world, what do you think is the best strategy to maximize one's resources? Invest in the market? Mutual funds? Stocks? Real estate? Should I be getting out of the market?

-- Ingemar Johansson, Honor, Michigan

Ever since it appeared the United States would be heading toward a war with Iraq, much of the investing coverage began to be filtered one way or another through a prism I'll call The War Effect. That is, every market wiggle was supposedly about whether or not there'd be war.

If you look at the Dow from mid-January until bombing began in mid-March, you'll see that stock prices were pretty much on a steady slide south -- a sign, said pundits, that the uncertainty of war was bad for stocks.

Sounds convincing enough. Except once the war actually began, the market staged a huge rally.

Journalists got around this contradiction by suggesting that the market climbed because going to war dispelled the air of uncertainty. Oh, I get it. Now that we're certain there'll be war, we feel more comfortable about the uncertainties that come with war.

Hogwash. The fact is that when you read that the market is moving because of a specific event, what you are getting is speculation.

Fact is, it's not just the war that influences stock prices these days. There are also factors like the fragile recovery of the economy, the iffy outlook for corporate profits, the seeming inability for companies to rev up their spending, concerns about whether the consumer is finally on the verge of being tapped out, the matter of trust (or lack of it) in corporate officers and regulators and several dozen other things that I won't bore you.

All of which is to say that I think it is a huge mistake to let the war color too much of your investment decisions. For one thing, doing so presupposes you know two things: how the war will be resolved and what that means for stock prices.

On the first point, I'm willing to bet that the war will be resolved in the United States' favor, that Saddam's sorry butt will get kicked.

But when it comes to the second issue -- what that means for stock prices -- I don't believe anyone can say for sure. Why? Because there are too many uncertainties even in the wake of victory.

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Will the Iraqi oil fields be destroyed or remain intact? Will the void Hussein leaves be filled by a legitimate government? Will the United States be hailed as heroes in the region, or as a villain, resulting in a backlash against U.S. citizens and companies at home and abroad? Who really knows?

And, of course, there are all those other economic factors I mentioned. Even if you were successful in rejiggering your portfolio to perform well during the war and its immediate aftermath, you would then have to start over again, trying to figure out how to restructure your portfolio in light of all the other challenges and opportunities facing us.

Of course, there's no shortage of people who will tell you how to invest in light of war or a bear market or inflation or deflation or any number of things. Unfortunately, this is what passes for intelligent investing in some circles.

But that's speculating, not investing.

So don't think stocks or bonds or real estate. Think diversity. Just as U.S. military leaders diversify in Iraq with a variety of attack options and forces -- air strikes, tank forces, ground troops, etc. -- so too should you own a broad spectrum of assets: stocks, bonds, mutual funds, real estate (although for reasons I've mentioned before, I prefer real estate securities to bricks and mortar).

In no way do I want to suggest that investing is anywhere as tough as war. But both do involve high degrees of uncertainty. And whether on the battlefield or the investing arena, the best way to deal with uncertainty is to spread your bets around. This way, if things don't play out the way you expect, at least you won't get wiped out.

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "Investing for the Financially Challenged." He can be seen regularly Monday mornings at 7:40 am on CNNfn.