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Has market hit bottom? Will it rebound by 2002?

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Peter Canelo, Morgan Stanley's investment strategist, thinks the stock market hit bottom in the spring and will rebound significantly by the end of the year. "The Fed is being extra generous with lower interest rates, and tax rebates are a second stimulus," he says. "A major decline in energy prices will start becoming a reality soon, and that's another pseudo tax cut."

PBHG Mid-Cap Value Fund balances both short-term and long-term growth against current stock valuations, looking for reasonable relationships between the two. This balanced approach has produced impressive returns during some tough market environments. The fund is among the top 20 percent for the last one-year and three-year periods and is also among the top stock funds ranked by risk-adjusted return. Recent favorite stocks: Sprint, XL Corp., Cendant, Telephone & Data Systems, Zions Bancorp., Parametric Technology, Metro-Goldwyn-Mayer, Quaker Oats.

Life insurance's profitability and recession-resistance makes it a "nearly perfect" business, says Smart Money magazine (1755 Broadway, New York, NY 10019). "Yet investors are turned off by its dullness and maudlin image. That makes life insurance stocks cheap, and foreign investors have been snapping them up. Few big insurers remain, and all are takeover candidates. Our favorites are the most undervalued: AmerUs Group, John Hancock, Lincoln National, Nationwide Financial, Protective Life, StanCorp, Torchmark, UnumProvident."

Unanimity is a rare commodity among investment newsletters. So whenever it occurs, it's well worth heeding. Here, according to the Hulbert Financial Digest (5051 B Backlick Road, Annandale, VA 22003), are the only six stocks now being recommended by 10 or more newsletters it regularly monitors: AOL Time Warner, Exxon Mobil, Microsoft, Nokia, Philip Morris, Washington Mutual.

Ten-year bonds issued by Australia, Canada and Germany recently had yields comparable to those of similar U.S. Treasurys, observes Pioneer High-Yield Fund's Margaret Patel. "In addition to these yields, investors get the potential for significant currency gains should the U.S. dollar decline from its recent super-strong level. Our favorite bond in this sector is the inflation-protected French government bond. It actually yields more than French bonds without inflation protection."

A recent study by Financial Research Corp. of Boston found that the average annual return for all mutual funds has been 10.92 percent over the past three years. Over the same period, the average fund investor earned just 8.70 percent. The 20 percent gap was due to the fact that so many investors move in and out of funds in a vain attempt to time the market. Such trading can also trigger tax bills.

SITE OF THE WEEK: The site www.ai-stocks.com provides stock recommendations based on neural networks and artificial intelligence (AI). It tracks more than 4,000 stocks and issues buy, hold, sell and neutral ratings on each. Analysis of 24 market sectors and nine investment styles, market forecasts, and a "future stars of the Dow" list is also available. Registration is free. However, information can only be accessed through tokens, which cost 75 cents to $1 each.

Investor's Notebook is a digest of investment opinion from the world's leading financial advisers. It does not recommend any specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited.