LAST WEEK WE attended the 20th annual Morningstar Investment Conference, one of the biggest gatherings in the mutual fund world. This three-day event featured speeches and panel discussions with some of the industry's key personalities. It's a great way to get a read on how the investing community is thinking about the stock market and pick up a few good ideas along the way. For those who didn't have a chance to attend, we've summarized a few of the presentations and posted links to the video interviews conducted on-site with respected fund managers. Admittedly, these are short synopses. But stay tuned. We'll be visiting with these folks throughout the next few months.

Opening Address: Mohamed El-Erian

El-Erian, the co-chief executive officer of PIMCO, the leading bond shop, set the tone of the conference with a speech that looked back at the messes investors stepped into the past 12 months and the ones they will be dealing with throughout the next year or so. There weren't many positives. El-Erian rehashed some of the crises that would have seemed impossibly far-fetched at last year's upbeat gathering: the hardships caused by the subprime defaults and the credit crunch; the massive write-downs at financial institutions and the humiliations of subsequent capital-raising; isolated runs on banks both here and overseas.

While El-Erian didn't exactly produce any startling revelations, he did deliver a riff on one of his favorite themes: emerging markets. He thinks these countries will continue to drive the global growth story, especially as U.S. consumers deal with the fallout of lower home prices, higher food costs and $4-plus gas.

As for the implications for your portfolio, Morningstar summed up El-Erian's speech with these don'ts: Don't treat the past year as a one-off situation; don't think we are going back to business as usual; don't forget that crises present opportunities; don't be fooled by the trap of narrowly framing asset class choices, since all investment portfolios will have to live through a bumpy transformation in the years ahead.

Ultimate Stock-Pickers Panel

This roundtable featured Peter Langerman, chief executive officer of Mutual Series, Dodge & Cox's chief investment officer Charles Pohl, and Robert Torray, manager of the

Torray fund

"We are seeing signs of the light at the end of the tunnel but there are still some landmines that have yet to be exploded," Langerman said.

The panel pegged financials as the sector posing the biggest opportunities and pitfalls. "[Financials] are the most misunderstood," said Pohl. Pohl talked about Wachovia, a big holding of Dodge & Cox Stock, while Torray discussed his interest in fixer-uppers such as American Express, Bank of America, Citigroup, and AIG. Pohl mentioned that he sold beleaguered bond insurer MBIA in May 2007 at around $60 a share. (It now trades at $4 a share.) "At this point I am glad we are out of it," he said.

What are they avoiding? Well, newspapers still make excellent liners for bird cages. "The competitive threats are real," says Langerman. "Pure play newspaper companies are fighting an uphill battle." He also says electric utilities have limited growth opportunities. Torray is skeptical of the run-up in infrastructure, steel, farming and fertilizer names. "I'm suspicious," he said. "If something goes wrong they will drop like rocks."

Let's Talk Bargains

This panel consisted of Bruce Berkowitz, manager of the

Fairholme fund

Westwood Holdings Group

Byrne, whose company is based in Dallas, is a longtime energy investor. She likes Apache and XTO. The latter she considers a proxy for the higher natural gas prices she thinks are on the horizon. However, she did sound some caution about the record price levels scaled by some commodities. "We are stress testing," she said. Byrne is concerned about how high oil could go and how quickly it could come back down. But "the balance sheets of these companies are strong," she said.

Both managers were cautious about financials. "They are tempting," said Byrne. Berkowitz wasn't so sure. "It's difficult to know what they own and who they own," he said. He warned against "premature accumulation" of financial shares as well as those of home builders.

One sector they disagreed on was health care. These stocks have been beaten down by class action lawsuits, patent expirations and concerns about reforms a new president might launch. Byrne owns some health-care names but said she's waiting for a catalyst before jumping in with both feet. Berkowitz, though, likes the cash flows some of these companies kick off and is willing to get in early. He's currently looking at HMOs and implied that he is tinkering with his Bristol Myers-Squibb position.

Berkowitz also laid out his rationale for holding on to Sears. First, he likes the brand. But he also praised the company's revenue base, its free cash flow and its undervalued real estate. In fact, he said, the company's real estate alone almost justifies the current share price. Investors would get "everything else for free," he said.

To see an interview in which Byrne discusses three of her favorite stock picks, click here.

Undiscovered Managers

This panel featured TCW's Diane Jaffee, Ralph Shive, manager of

1st Source Monogram Income Equity

namesake fund

The trio spent a lot of time talking about financials, which continued to generate lively disagreements. Jaffee said she is intrigued by names like Fannie Mae. But Osterweis wasn't so enthusiastic. "We still think we are in the early stages of the credit cycle," he said. Meanwhile, Shive is starting to take a look at these names and is concerned about not owning any of them once they do start to recover. "I want something to light up on my computer screen once they start to get going," he said. But for the moment he owns industrials at the expense of financials and consumer stocks.

The panel ended with a lighting round of stock picks. Shive said he's buying General Electric on the dips. Osterweis was bullish on Valeant Pharmaceuticals based on new management, a cost-cutting program, share buybacks and a promising drug pipeline. Jaffee liked Arena Pharmaceutical.

For a video interview with Shive discussing his top stock picks, click here.

General Session Speech: Jean-Marie Eveillard

This well-respected value manager recently came out of retirement and returned to the First Eagle funds, where he crafted an impeccable reputation. For starters, Eveillard announced that he would soon make a crucial hire that would allow him to return to retirement over the next several years. That appointment is expected by the end of the summer.

In terms of opportunities, Eveillard said he likes American Express despite the possible exposure to cash-strapped consumers and businesses. He is also looking at cheap Japanese stocks. Eveillard said he's still keeping gold in his portfolio in bullion rather than an ETF. And the near-term returns of exotic investments like private equity will be "zip at best," he predicted.

Redefining Growth

This panel discussion included

Morgan Stanley's

Thornburg Core Growth

Legg Mason Growth fund

Hagstrom said he got back into financials in March when the market appeared to have hit bottom. He is making a three- to four-year bet on these names. "They are basically going to go from nothing and ramp up quickly," he says. "It looks like we are a little early, but we want to have a beachhead." Motola is also intrigued by the financial industry, while Lynch was lukewarm. "It's hard for us to get comfortable about them," he said.

Google is a mainstay in growth portfolios, so it was natural for these managers to sound off on the company and the drama unfolding at Yahoo. "I will own it for years to come," said Hagstrom of Google. Motola quickly echoed that stance. "They will continue to take market share as their competitors are in disarray," he said. "All roads lead back to Google," added Lynch.

Manager Interviews

Finally, we sat down to chat with some fund managers who deserve to be better known. Click

and

for two contrarian picks from managers at

Croft Value

Auer Growth

Also See:

• Fund Managers Take Home Less Pay in 2007

• First Half of 2008 Yields Losers, a Few Winners

• Some Funds Stress Managers' Personal Stakes