DAVE CARPENTER

CHICAGO (AP) â¿¿ There's plenty for investors to ponder as the lazy days of summer arrive.

The stock market is steady again after a stomach-churning May. But the Standard & Poor's 500 index is still down 12 percent since a bull-market rally peaked two months ago. A weak housing market, high unemployment, a huge U.S. deficit and Europe's sovereign debt crisis all remain cause for concern.

Yet, the economy also shows some hopeful signs. The manufacturing and automobile industries are improving; corporate earnings have bounced back and consumers are spending more â¿¿ albeit cautiously.

Regardless of whether you are pessimistic or optimistic about the economy, there are certain things for every investor to ponder at the halfway mark of 2010.

Here are some moves to consider and steps to avoid, according to investment professionals and money managers attending the Morningstar investment conference that ended Friday:

1. Bargains can be had.

Stocks are nowhere near the steal they were a year ago. But bargains abound if you look for them.

Health care may be the most undervalued sector at the moment, according to Morningstar Inc. Many investors fled from those stocks earlier this year amid uncertainty surrounding health care reform legislation. Other industries with good buys: Business services, telecommunications, financial services and energy.

Be cautious about software and hardware stocks. Investors have pushed those sectors' prices up well beyond what their earnings potential suggests they are worth, Morningstar says.

For individual stocks, analysts for the stock and fund analysis company singled out a mixture of blue-chip and lesser-known stocks to consider: nuclear plant owner Exelon Corp. (EXC), health care giant Johnson & Johnson (JNJ), molecular diagnostics company Myriad Genetics (MYGN), drugmaker Pfizer Inc. (PFE), Florida landowner St. Joe Corp. (JOE), offshore drilling contractor Transocean Inc. (RIG) and orthopedic implant maker Zimmer Holdings Inc. (ZMH).

2. Don't let Europe scare you off international stocks.

Fund managers advise keeping a sizable portion of your stock portfolio in international stocks or funds. Not only do U.S. stocks face limitations in an uncertain economy, prospects of continued high growth in the four largest emerging-markets countries â¿¿ referred to collectively as BRIC, for Brazil, Russia, India and China â¿¿ and elsewhere remain strong.

Opportunities in northern Europe are worth considering, said James Moffett, lead portfolio manager of the Scout International Fund. The area is more focused on manufacturing, so it doesn't suffer as much from Greece's debt woes as the south, he says.

International stocks that Moffett likes include German industrial conglomerate Siemens AG; Khomatsu, a Japanese heavy machinery company that competes with Caterpillar; and Luxottica, an Italian company that makes eyeglass frames.

3. Bonds are no guarantee of safety.

Fleeing into U.S. government bonds has long been the default option for investors seeking safety. But now that carries perils.

Bonds are in line to take a hit when the Fed moves to raise interest rates, since they generally move inversely to interest rates. That is likely to happen within a year.

Financial planners who spoke at one conference session said retirees should have 40 percent of their assets in short-term fixed income. But other investment professionals maintain that's too high for the long run.

Determine the appropriate balance of stocks and bonds for your needs and your portfolio, as well as the type of bonds.

"High-quality, short-term corporate bonds are the sweet spot," said J. Michael Martin, president and chief investment officer of Financial Advantage in Columbia, Md. "But having too much in low-yield government bonds will expose you to inflation risk."

4. Avoid hasty, emotional decisions.

Someone who's lagging in long-term savings can easily be tempted to try the investing equivalent of a "Hail Mary" pass to make up for losses in the market over the last two years. That might mean, say, devoting your retirement nest egg to high-risk emerging markets overseas or going all-in on BP shares.

An opposite but equally irrational move might be to yank everything from stocks and plunk it into U.S. Treasurys or money-market funds yielding close to zero.

Don't do it. The key to long-term success is emotionless, disciplined investing.

"For some investors, index funds can play a role," says Terry Burnham, director of portfolio management at Acadian Asset Management and author of "Mean Markets and Lizard Brains." ''But there are other investing styles that can work well."

5. Remember the five-minute rule.

From derivatives to hedge funds to exchange-traded funds focusing on every niche imaginable, there are many options for where to put your money.

But as Vanguard CEO Bill McNabb noted, simplicity should be a priority for investors and advisers alike. Follow the five-minute rule: If you can't understand an investment or what underlies it in five minutes or less, give it a pass.

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