In February, stock fund investors did a curious thing. Instead of running for the exits as the S&P 500 continued falling, they pumped large sums of new money into U.S. and international stock funds. Are investors getting smarter, buying when the news is bad and markets are falling, versus buying after big market run ups only to sell, in a panic, when the market falls?

Unfortunately, that's probably a stretch. But they did do less damage to their portfolios in February than in January. According to Strategic Insight (SI), a mutual-fund research company, February saw a net inflow of $17 billion of new money into stock funds. That's a reversal from January, according to SI, when stock funds saw net redemptions from investors who experienced 6 percent declines, on average, in their stock funds. No doubt the losses continued in February, a month when the S&P 500 declined by 3 percent.

Avi Nachmany, director of research at SI, says while it may appear that investors seemed to be buying the market's weakness, the truth, he says, is that their selling merely slowed down in February. Also, the inflows to stock funds don't reveal how anxious investors really are: flows into money-market funds offer a more accurate picture of sentiment, which is fearful. According to the Investment Company Institute (ICI), as of the first week of April, total money- market funds were $3.5 trillion, up more than 30 percent from $2.7 trillion in August, when the markets began digesting news of a spreading credit crisis. Of that total, institutional money-market funds make up more than $2 trillion, and retail money funds more than $1 trillion record highs for both categories.

If mutual-fund investors knew what was good for them, they might start adding to their positions now. Lincoln Anderson, chief investment officer for LPL, thinks that the U.S. stock market is increasingly becoming a place to bargain hunt. "Outside of financials, earnings and underlying support for earnings are good," he says. He particularly likes the balance sheets of U.S. non-financial companies: "Balance sheets look awesome. We've gone from having net liabilities in 1999 of $1 trillion, to net assets of $1.5 trillion." The two factors that could ruin the opportunities but, which he expects, are unlikely are continued rises in oil prices, and more declines in the value of the dollar. And with the dollar down nearly 50 percent since 2002, he thinks betting against the greenback and seeking returns overseas is risky. "We're taking care of retirement accounts at LPL, so future liabilities are dollar denominated-not too many folks are going to be retiring in Spain," he says.

One top A.G. Edwards advisor (now Wachovia) sees the world quite a bit differently. He's avoiding all things dollar denominated. He says the Fed is out of control, "printing money like it's toilet paper," while lowering interest rates; and he doesn't like what he sees over the horizon for U.S. stocks. Instead, he still likes commodities, natural resources and international investments, particularly unit-investment trusts that deliver returns in the currency of the company's home country.