Morningstar's International Fund Manager of the Year in 2001, Eveillard describes his philosophy as a "basic value approach" in the vein of Benjamin Graham and Warren Buffett. Eveillard believes P/E ratios are a Wall Street invention, just an attempt to obscure what really counts, which is free cash flow. That belief has paid off big, as has a kind of investor's insurance he favors -- gold. Eveillard's funds have had an exceptional run in this beaten down market: His gold fund -- a number-one-rated Morningstar Fund -- is up over 100 percent this past year, and up more than 80 percent year to date; his Global Fund is another winner -- up more than 12 percent over the past 52 weeks, and up almost 9 percent this year alone.

Newmont Mining

TVX Gold

"Newmont and TVX are almost purely plays on gold. The price of gold started going up, and gold mining securities always provide tremendous leverage, and are sort of calls on gold, options, so to speak.

"We look at gold as insurance against bad things happening in fundamentals. In the 1980s and 1990s, the market was spoiled, it was a paradise for financial assets, almost on bad news. But then we had the bursting of the bubble, the Sept. 11 attacks, and then Enron.

"These are not long-term investments, but simply an insurance policy. At some point, either the insurance premium to pay for gold will get too expensive, or the odds that something bad will happen will become less."

Freeport McMoran Copper & Gold

"Freeport McMoran is a hybrid, with both base metals and precious metals. It's a partial way into gold, but because it's a hybrid, it's less expensive than pure precious metal plays."

Rayonier

"Rayonier cannot be analyzed on a price-to-earnings ratio. Basically, it's the ownership of timberland, one of the few commodities that has kept up with inflation.

"It has tremendous cash flow. If you and I went out and tried to buy a forest somewhere in the United States, we would have to pay 10 times cash flow. In the securities market with Rayonier, we have the ability to buy an owner of timber land at seven times cash flow. The stock is about $48 or $49, and our analyst figures the intrinsic value of the security is something between $65 and $75 per share. So at the current price, it is a decent holding."

Tyco

"We couldn't understand how ex-CEO Dennis Kozlowski could say the company was growing 20 percent a year, not with mature businesses. Earnings per share wasn't in our view, because that is what Kozlowski was playing around with. We had no interest in Tyco when the stock price was at $40, $50 or $60.

"But we kept our eye on the company because we believed it owned attractive industries -- somewhat cyclical, but extremely profitable. So when the stock came down to $20 per share, one of our analysts took a look at it. What would a strategic buyout pay for for a security business or some of the other businesses? Add it all up, take out the debt, and our analyst came up with something like $30 per share."

McDonald's

"This is really two businesses: a real estate business, and a restaurant-operating business. You have to value them differently, and when we did so and added the two, we came up with a value of $39 per share."

Vivendi Universal

"A sum of the parts evaluation yielded a value of $25 to $30 per share."

Liberty Media

"This company has a large number of stakes in publicly-traded media companies, but it sells at what we estimate is a 40 percent discount to the the already-depressed valuation of its stock holdings."

Don Phillips' mutual fund picks

Nothing has more cachet in the mutual fund business than Morningstar's famed five-star rating system. It's so ingrained in the investing culture that few people buy a mutual fund without checking the ratings first. Yet the rating system historically has often been a poor predictor of future performance; one-star funds have outperformed five-star funds 45 percent of the time since 1995.

"The problem isn't that people buy bad funds today, (but) that they buy a series of good funds that do the same thing," Phillips said on tonight's broadcast. "And because of that, they assemble a bad portfolio. We want to move the debate away from good-bad fund towards use of an approriate fund for a given investor with a given goal."

* Phillips' Up-And-Coming Funds *

William Blair Small Cap Growth

"Morningstar analyst Emily Hall is impressed with this team. They have a contrarian streak. Here is a group that does great research. Today is not the time to forget about growth."

Dodge & Cox International Fund

"Investors have not been looking at international, because you had a strong dollar for eight years. But there is a tremendous need to have international. Maybe I say that because the first fund I owned was the Templeton Growth Fund, which is a great international fund.

"All of the opportunities are not going to be in the United States. We got sort of myopic in thinking all the great companies were here, because tech was so great in the '90s. But there is no reason for that. The more you diversify, the better you will do."

* Phillips' funds to avoid *

American Heritage

Berkshire Focus

"These two funds have names that are very soothing. "American Heritage" and "Berkshire Focus" -- you might think Warren Buffett (of Berkshire Hathaway fame) has something to do with it, but he doesn't.

American Heritage and Berkshire Focus are funds that are very concentrated, with some very volatile stocks. There are times they might pop up on the leaders list, but they have very high expense ratios. The name which may be soothing really isn't what you are likely to get in the portfolio."

* Phillips' Rising Stars *

Jamie Harmon, manager of Fidelity Small Cap Retirement

"We're impressed with the whole team of young managers at Fidelity. The portfolio put together by Jamie Harmon is very different from the pack. Here you see a lot of original thinking."

Jason Yee, manager of Janus Global Value

"Our analysts are very impressed with the bottom-up approach here. Unlike many international funds, there's a focus in this fund on individual stocks, rather than regions."

Jerome J. Heppelmann, manager of PBHG Focused Value

"This fund is known for growth investing, yet it's a terrific value fund."