Top-Performing Funds Find Value in Caution

He expects his consumer staples and health-care picks will continue to beat the broader market through the first half of 2009 or so, followed by what he calls a "tipping point" when more cyclical stocks will come into favor.

Any recovery will likely be accompanied by volatility as markets test the staying power of the early indications of a rebound, just as 2008 saw the market go on a bumpy ride searching for a bottom.

"It wasn't necessarily a buy-and-hold year in 2008," Forester said. "And I think that 2009 will be the same."

In an otherwise battered financial sector where big banks have been hit the hardest, Ellison is confident his small bank investment niche will continue to perform relatively well. Smaller players won't face as much uncertainty in 2009, given the likelihood that regulators will rewrite investment and accounting rules to prevent some of the abuses that led to the financial meltdown.

"The little guys didn't do any of that stuff," Ellison said. "So they didn't have all the complicated and aggressive accounting schemes that are going to be regulated away."

But Ellison doesn't believe big profits are just around the corner for small banks. There are too many uncertainties in the economy, and low borrowing rates for everything from mortgages to auto loans will pressure all banks' bottom lines. So for now, Ellison hopes to keep plenty of cash on the sidelines.

"I think unaffordable mortgages are still going to chew on the economy for a while," he said.