With stocks looking about as firm and appetizing as an old banana, many fund managers say they're sitting on the sidelines and cutting trading to a minimum until the market stabilizes.

"I'm just hiding under my desk, sucking my thumb," jokes Robert Loest, portfolio manager of $418 million

(IPSMX)

IPS Millennium and $19 million

(IPSFX)

New Frontier, two tech-heavy growth funds down 24.3% and 34%, respectively, over the past three months. Midway through Monday's trading day, he said he hadn't done any buying or selling.

It's hard to blame him. Monday was typical of the kind of market volatility that money managers have had to contend with lately. The

Nasdaq Composite Index

lost as much as 218 points before rallying to close down 26 points at 3364.

Since Jan. 1, most major stock indices are underwater. The tech-heavy Nasdaq, which rose more than 80% last year, is down more than 32%; the Dow is down 7.6%, and the mostly small-cap Russell 2000 is down 5%. Tech stocks and Net stocks in particular have led the decline.

TheStreet.com's Internet Sector

index is down more than 37%.

More distressing than the once-sizzling tech sector's correction might be the lack of conviction elsewhere as the market stumbles into the usually quiet summer months.

"It's been tough to get an indication of the direction of anything these days. There's no sector leadership out there," says Chuck Carlson, co-manager of $132 million

(SDOWX)

Strong Dow 30 Value. Carlson said he'd done little trading Monday, adding slightly to his

General Motors

(GM) - Get Report

position as the stock plummeted. GM finished down 9 9/16, off 11% for the day, at 77 3/8. His fund is down 5.7% since Jan. 1.

In past years, on down days fund managers would routinely say they were buying on the dips, even if dropping prices indicated otherwise. That wasn't the case Monday.

"What the hell are you going to do? You're not going to sell and certainly not going to buy when everything is falling like this," says Loest, who on Friday wrote in the portfolio manager diary he posts to his firm's

Web site that he is "laying low."

Those who are investing say they are sticking to cheaper stocks with fat dividends. Those quarterly checks can provide a steady cushion in a falling market.

"With stocks that have a reasonable yield, you're essentially getting paid to wait for the market to sort this out," says Strong's Carlson.

He points to wheezing

Phillip Morris

(MO) - Get Report

as an example of a stock that might have little downside risk and a solid yield. The stock is down 31.6% over the past year, but it is selling for a low 8.3 times its trailing earnings, and its dividend yield is a juicy 8.6%.

Carlson also likes utility stocks, and so does IPS' Loest, who says the group pays good quarterly dividends and could see some decent returns as privatization spurs competition and merger activity. He began adding utilities to his Millennium fund to undercut the volatility of its tech and Net-stock holdings. While it hasn't kept the fund above water, it has helped. Since Jan. 1, the

Dow Jones Utilities Index

is up 15.9%.

On April 30, some 27% of the fund was invested in utilities, and it had a 10% cash position -- more than double the average fund's, according to

TrimTabs.com

, which tracks fund liquidity.

Duke Energy

(DUK) - Get Report

and

Peco Energy

(PE) - Get Report

were among the fund's top 10 holdings. They're up 22.6 % and 25%, respectively, since Jan. 1.

Loest also likes small bank stocks such as

North Fork Bancorporation

(NFB)

, but Dave Ellison, manager of the $21 million

(FBRFX)

FBR Financial Services fund, notes that financials probably won't go up until interest rates stabilize. That could keep the group in the penalty box for some time.

Other managers polled have high hopes for pharmaceutical stocks such as

Bristol-Myers Squibb

(BMY) - Get Report

and

Pfizer

(PFE) - Get Report

. Some say household-products companies like

Gillette

(G) - Get Report

and

Colgate

(CL) - Get Report

could weather the storm well, too.

There are at least a couple of folks out there who think there's reason to do some buying among large-cap tech stocks.

Money manager Alexander Cheung, who used to run the

(MFITX)

Monument Internet fund, says he's been "selectively" putting cash to work in the Nasdaq triumvirate of

Microsoft

(MSFT) - Get Report

,

Intel

(INTC) - Get Report

and

Cisco

(CSCO) - Get Report

.

"Obviously, it's not looking good out there," says Cheung, who now works out of his own investment shop,

Long Bow Capital

, in King of Prussia, Pa.

There are others in the Mister Softee fan club. Jeff Van Harte, manager of the

(TEQUX)

Transamerica Premier Equity fund, likes the software titan, too. "The market has already priced in a lot of the antitrust case's worst effects. I think it's still one of the most wonderful businesses on the face of the planet," he says.

For their part, financial planners say you shouldn't let the current turmoil turn you into a market timer, someone who moves money in and out of the market in hopes of profiting from a market bottom or top.

"We don't play timing games. I believe it's delusional for someone to try to make timing calls," says Frank Armstrong, president of Miami financial planning firm

Managed Account Services

and chief investment strategist for

DirectAdvice.com

.

He and other advisers says that if investors take any action, they should weigh whether or not they have enough fixed-income and foreign stock exposure. Both can keep a portfolio afloat if U.S. stocks continue to correct.

Armstrong, who typically invests up to 50% of a client's stock assets overseas, notes that since the first quarter, client requests for more tech exposure have stopped cold.