Where to Invest 2009: The Overview

Each January SmartMoney surveys the stock market to find the most promising stocks worth grabbing for the coming year. This year there's a multitude of worthwhile candidates—from giant industrial conglomerates to highly profitable technology firms.

But we share a knot in our collective stomach, worried that the ugliness of 2008 could linger into the new year or beyond. Still, investing pros offer one answer to the paradox: Create a portfolio of stocks that have a wider range of risks than usual-from the safer, recession-resistant businesses with good dividends but small price swings to those stocks that carry higher risk but the potential for high return.

"It's the barbell approach," with higher-risk stocks balanced by the safer ones, says Ed Crotty, who manages about $1 billion in assets as chief investment officer of Davidson Investment Advisors.

Stock investing of any sort is scary these days. Nearly 11 years' worth of market gains have been wiped out in just 13 months. And there's the possibility of more suffering, especially if the credit crisis reaccelerates or the world sinks into a depression.

But those who want to dip their toe back into the market can take comfort that they're not alone. Some savvy long-term investors are taking the barbell approach as they quietly pick up stocks beaten down in the market morass. Many of the companies are big-name firms with strong growth records.

Perhaps most important, the market has been in bad shape before and recovered. Since World War II there have been 13 bear markets, when stocks have fallen by 20 percent or more. According to the Leuthold Group, a Minneapolis-based authority on market behavior, stocks rebounded an average of 34 percent within a year of the bear market and 51 percent after two years.

Read our annual top picks, organized by risk levels:

(Additional reporting by Roya Wolverson and Jason Kephart)