In the investment markets, these are neither the best of times nor the worst of times. They are the age of low volatility.Only twice in the last three years has the Standard & Poor’s 500 Index gained or lost as much as 2 percent in a single day. That happened 23 times in a single year of the great bull market in 1999.

In the realm of interest-bearing securities, more than six months have passed since the US Federal Reserve last changed its target rate for overnight bank loans, which sits at 5.25 percent. Some think the so-called federal funds rate will stay put for many more months to come.

We still see occasional flashes of excitement, such as the sell-off in commodities and emerging-market stocks last May and June. Yet that episode passed so quickly it stamped itself as the sort of exception that proves the rule.

Calm in markets certainly seems at odds with the global political character of the times, which is as unstable and scarifying as ever. In truth, though, world economic conditions are solid in many ways, and securities markets are deeper and more efficient than ever.

Great news for investors, right? Well, not entirely. While order is usually preferable to disorder, it cuts down on the trading opportunities. When there isn’t much distress selling, there is seldom much merchandise for sale at distress prices.

Right along with reduced volatility has come a dramatic narrowing in the price differences, or spreads, between top-quality and lesser-quality, riskier investments. The great lament nowadays is about how few bargains are found in any asset class.

In a setting of stability, the temptation may be great to take extra risks in search of a better return, however slim the spread may be. Don’t do it, many advisers say — it makes more sense to go in the other direction, emphasising high-quality investments.

In stocks, for instance, staid old dividends have gone from sneers in the late 1990s to cheers in the middle of this decade. For US investors, this had something to do with a change in the tax laws that made most dividends eligible for the same favourable income-tax treatment accorded capital gains.

It also had something to do with recent market experience. From the end of 1999 through 2006, according to my Bloomberg, the broad Russell 3000 Index posted a total return of 15.6 percent, only 3.6 percent of which came from price appreciation. Credit the rest to the other component of total return: dividends.

This decade’s best price gains have been concentrated in smaller stocks, which typically pay less of their earnings out in dividends. The small-stock Russell 2000 has gained 71 percent over the past seven calendar years — but even in that case, the advance was a significantly smaller 56 percent on price appreciation alone.

Beyond that, play-it-safers argue that today’s new investment money ought naturally to incline toward high-quality stocks and bonds, since they cost little or nothing extra to buy in comparison with their lower-quality counterparts.

“Investors in 2007 will not be compensated enough for taking risk,” says Chris Cordaro, chief investment officer at the Chatham, New Jersey-based financial-planning firm RegentAtlantic Capital LLC, which oversees $1.5 billion.

Five or six years ago, an income-minded investor with a bit of daring spirit could venture into, say, mutual funds specialising in emerging-market bonds in hopes of a substantially better pay-off than was available in top-quality debt such as US Treasuries.

That worked out nicely. Over the last five years, emerging-market bond funds tracked by Bloomberg have returned almost 16 percent a year, triple the 5 percent-a-year pay-off of funds focusing on investment-grade corporate bonds.

That’s all in the past now. A repeat performance of anything like that in the next five years simply isn’t a realistic hope.

There’s no predicting when, or even whether, price differentials between lower and higher-quality securities will widen out again. But if and when they do, simple math tells us that owners of top-quality securities will get hurt less than investors in the lower-quality sectors as spreads expand.

“Investors can stay high quality and wait for the markets to correct themselves,” Cordaro says. “Second, they can hedge against the mispricing of risk and benefit when risk becomes more appropriately priced.”

A play-it-safe strategy has its own risks. It can cause me to miss some of the bounties of a bull market in stocks — like the stealth recovery that has pushed the market up for the past four years. But even if I adopt play-it-safe for only part of my portfolio, it will give me something in reserve against the day when faster action and higher volatility return.

(Chet Currier is a Bloomberg News columnist. The opinions expressed are his own.)