When the economy gets tough, the tough get buying

To be sure, consumers remain just as depressed as investors. The Reuters/University of Michigan's Survey of Consumer Confidence fell to levels last seen in 1982. But 1982 really was much worse than today: Unemployment averaged 9.7%, the average mortgage rate was 15.1%, and Maneater, by Hall & Oates, had been on the Top 40 charts for weeks.

In addition, the government is sending out $100 billion in cheer to consumers even as you read this, and it's likely to be spent sooner rather than later. Even if people use the stimulus money to pay off credit cards rather than buy iPods, that means they will have credit lines to use when times are better.

If you're going to tiptoe into the market, play it safe: These are still perilous times, and you don't want to bet on highly specialized, volatile funds. Start by looking for broadly diversified, large-company stock funds. Should the economy slump again, large-cap stocks should hold up better than small-company funds.

The chart shows five top-performing large-company funds that look for stocks of companies with growing earnings. But they don't buy stocks whose prices are high relative to earnings.

These funds also have low annual expenses, which means you get to keep more of what you earn. The more you pay to your fund manager, the less you can keep for yourself.

Finally, all have good performance, relative to the risk they take. That's important: Sure, you can earn a bundle in a red-hot sector fund, but you run a big risk of giving it all back — and more — in short order.

John Waggoner is a personal finance columnist for USA TODAY. His Investing column appears Fridays. Click here for an index of Investing columns. His e-mail is jwaggoner@usatoday.com.

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