Best Investment Ideas For 2008

Jan. 2, 2008 Special to ABCNEWS.com — -- Back in January 2007, Jim Stack, editor of Whitefish Montana's InvesTech Research and Portfolio Strategy, surveyed the U.S. economic landscape and didn't like what he saw. There was a growing risk of a recession, he thought. The residential real estate market was unwinding. Stack shared his worries with readers that month.

"If complacency breeds danger," Stack wrote, "then we might be sitting on a powder keg heading into 2007."

Stack positioned his portfolio in a defensive crouch, believing that the degree of risk out there, in his opinion, warranted higher caution. He avoided the financials and real estate-related sectors. His cautious bets have payed off. His managed accounts, year-to-date, are up 8.1%. That beats the 5.6% gain of the Dow Jones industrial average and the 2.2% increase of the S&P 500.

For worrywart Stack, its vindication of his "safety first" approach.

"We were called doom-and-gloomers," he says. "But we felt there would be a serious unwinding in the housing market. There is now some feeling of comfort at this point, if no other reason than we haven't lost money."

Click here to see 12 recession beaters for 2008 at our partner site, Forbes.com.

The year 2007 probably left a lot of investors feeling financially seasick, with its dizzying ups and downs. The blue chip Dow surpassed historic milestones, but market turbulence returned with vigor. U.S. markets were choppy and volatile as investors worked through a web of concerns: oil prices kissing $100 a barrel, a busted housing boom and ugly write-offs by big banks.

As the year comes to a close, there is a lot of worry out there on Wall Street. For evidence of that hand-wringing, just check out a simple stat on stock market volatility: the CBOE Volatility Index--a literal measure of volatility reflecting the premium that options traders are willing to pay on the S&P 500 Index options--spiked 250% from January through mid-December. This was one of the quickest and most dramatic increases in volatility since early 1994.

Heading into the New Year, Forbes.com checked in with a few market pros to see where they're putting money in 2008. These gurus had some wide-ranging opinions on how they plan to position their portfolios, which sectors they like and which ones they're planning to avoid. These big-picture professionals were at odds over which areas of the market had the most prospects and where they would counsel investors to commit capital.