PhotoAll right, pay attention a minute. Amy Winehouse died. Rupert's boys (and girls) behaved badly. JenLo may split from whomever she's married to. There's more buzz about the IMF chief and the hotel maid. It's been really hot.

But forget all that for a minute. Let's talk about something more important – your money. Where is it right now? If all of your money is currently invested in debt, then you can sleep soundly (or at least as soundly as you usually do) but if you have stocks, bonds and other investments, it's worth taking a moment out to consider that the full faith and credit of the United States may not mean much in the weeks ahead.

In the scheme of things, this is probably more important than the details of Jennifer Lopez' marital situation so let's consider the possible end of the world as we know it. Forget politics for a minute; this is serious.

If you are in the stock market, whether through individual stocks or mutual funds, consider for a moment that if Congress abdicates its responsibility, the stock market is likely to tank, losing a huge amount of its value. How will you feel if you wake up Aug. 3 to find that your IRA is now worth half what it was the day before?

Lambs to the ...

We don't like to say this, but up and down Wall Street the talk is all about how the “sheep” (the term of art for individual investors) are still sitting in equities. Financial advisors are amazed that their clients have not even called to discuss the situation.

Folks, this is not a good situation. The last time the stock market took a dive, millions of individual investors sat tight until the market hit bottom. Then they sold, taking huge losses.

Remember the credo: Buy low, sell high. Not the other way around.

If your equity holdings – stocks and mutual funds – are part of your IRA or other tax-exempt vehicle, this might be the time to move a portion into cash or a cash-equivalent. It won't cost you anything to do so, other than any brokerage fees you may incur.

Time to move?

Even if your portfolio is not tax-exempt, it may be a good idea to move at least some of your holdings out of equities. Yes, you may incur capital gains tax (the “rich person's tax” we hear so much about) but that may or may not be an issue depending on the basis of your holdings.  

Yes, you may have to pay some capital gains tax if you sell some stocks now but if the market goes south in a few weeks, you will most likely be ahead of the game.

Because this is not an investment-advisory site, we are going to ignore the whole area of equities versus bonds. Let's just say that if your retirement fund, nest egg, life's savings, investment portfolio or whatever you want to call it consists mostly of stocks, you are Humpty Dumpty right now, sitting on the wall, hoping everything turns out OK.

If you fall off the wall, it will take a long time to put you back together.

What to do

It's pretty simple. The big money has been moving into cash. That means money market funds, even certificates of deposit if you are truly risk-averse, and various bond funds.

Bonds may be good for individual investors but a U.S. government default would not do wonders for the bond market either.  It's crucial to choose the right bonds or bond funds.

We're not financial advisors so don't rely on us for specific advice. But if you don't do anything else this week, consider this: Congress is fiddling while the economy burns and your life savings (assuming you have been trying to do the right thing and save for your retirement so that you are not a drag on society and your family) are at risk. You need to think about this. And research it. And talk to your financial advisor, assuming you have one. If you don't, get one.

Do it now. Forget about Amy, Rupert and Jennifer. Focus on what matters.