"You can't be thinking, 'I'll buy them next November,'" says the fund manager. "The stocks are going to be a lot higher then unless something crazy happens with the consumer."

No less important than the debate about when to buy is what to buy. The fund manager, for instance, likes -- and is long -- both Electronic Arts ( ERTS) and Activision ( ATVI), saying both companies have a strong lineup of hits for the current game machines.

For his part, Spiegel likes -- and is long -- Take-Two Interactive ( TTWO), arguing that the company is poised to do well whenever it releases the next version of its flagship franchise, Grand Theft Auto.

Still others ask, why choose? "You could buy a basket of them, and you will make money," says Steve Monticelli, president of Mosaic Investments, which has no current positions in the sector. "They will move as a group."

But before that taking-off point, investors may need to endure some pain. As EA CFO Warren Jenson told investors and analysts earlier this month at the Harris Nesbitt Media & Entertainment Conference in New York, "This is a transition. Expect the unexpected."

That's certainly the lesson of past console cycles, particularly if by "unexpected" Jenson means "unpleasant."

Overall game software sales flatlined during the last console transition. Companies such as EA and Activision saw their bottom lines dip deep into the red. And during the last two transitions, many software publishers saw their stocks hit bottom within months after the new consoles launched.

And those were often the success stories. At the opposite ends were companies such as Acclaim and 3DO that, instead of riding the next generation to new prosperity, instead were ridden off the rails and eventually forced to close shop.

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