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Investing Specialists

Six Great Rebound Candidates for 2009 and Beyond

Hard hit funds often lead the way in a rally.

Markets and economies are resilient things. Sure, it doesn't feel like that right now because we're in one of the worst recessions on record. But they are.

To play a rebound in both, look for great funds that got hit hard in 2008. In fact, the funds I'm thinking of have already shown they have a lot of pop on up days. I know these funds may have disappointed in 2008, but no fund is bulletproof. The best ones outperform in most rallies and lose less in most down markets, but none have defenses for every kind of down market.

To me the real challenge of picking funds today is choosing between stocks and bonds. Both appear to offer great return potential. Some bond funds are yielding north of 10%--to be sure, there's a risk the recession will cause some companies to default on their debt. But at these yields, you ought to get compensated for a few defaults.

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