If you've got cash on the sidelines, you've probably spent much of the past year wondering how you'd know when you could put it to work in the market without worrying about losing it all. Even though stocks recently touched 12-year lows, there's no guarantee that we've put all the losses behind us.

What you can do, though, is to identify which investments you think will perform the best when the inevitable rebound does come. There's a huge payoff if you're right -- by deploying your cash at the best possible time, you could make up for the losses you've suffered much more quickly.

Finding the right funds
In this month's issue of our Motley Fool Champion Funds newsletter -- which comes out hot off the digital presses at 4 p.m. ET this afternoon -- our mutual fund expert Amanda Kish takes a look at all of her recommended funds to assess how they've responded to the bear market. As you'd expect, many of the stock funds among those recommendations have lost ground over the past three years -- though quite a few have fared far better than the 14% average annual losses that the S&P 500 has suffered since early 2006.

Yet even though the bear market hasn't left her portfolio unscathed, Amanda believes that some of her recommendations look more attractive than others at this point. In going through her favorite funds, she points out a number of valuable ways we can all look at our portfolios.

Hallmarks of a successful portfolio
First and foremost, it's important not to give the past too much weight in assessing a fund's prospects. In considering where to put money now, you don't care how much others have lost recently. You only want to earn as much profit of your own as you possibly can from this point on.

Even so, fund managers' previous performance can give you a clue as to how they'll do in the future. You may not be so concerned about short-term results -- but insight into how a management team responds to the stress of a bear market gives you valuable information you can use to make a decision.

Finding smart investments everywhere
Regardless of what type of investments they buy, top funds balance two key goals: staying true to successful investing strategies while adapting to new market conditions. Consider:

  • International stocks like CEMEX (NYSE:CX) have gotten hit hard, as U.S. investors retreat to the perceived safety of domestic stocks. Yet many agree that you'll need to go abroad to find the best investment opportunities for the coming decades.
  • Bond funds have taken a lot of damage from the credit crisis, as the financial mess that has snared banks from Wells Fargo (NYSE:WFC) to US Bancorp (NYSE:USB) has raised huge doubt about the value of many fixed-income securities. Fund managers who avoided that morass are now in a much better position to take advantage.
  • Although big companies like Citigroup (NYSE:C) and General Motors (NYSE:GM) have gotten the lion's share of press attention during the recession, with huge layoffs and big bailouts, many small and mid-sized companies have also seen their stocks drop precipitously. Yet in most cases, a recovery tends to help smaller, more nimble companies first -- and they could see big gains as a result.
  • Sometimes, looking in the hardest-hit places will yield the most promising ideas. For instance, ConocoPhillips (NYSE:COP), Total (NYSE:TOT), and other energy companies have lost huge amounts of value as oil slid from nearly $150 down into the $30s recently. Yet when a recovery increases energy demand, those prices seem likely to rise -- and bargain energy stocks will benefit.

That's why Amanda's recommended funds span the gamut, including an international fund, a bond fund, two small-to-mid-cap funds, a value fund, and a growth fund. They've offered very different returns recently, but what they have in common are fine management teams with a proven track record of finding investments that will outperform the overall market, especially during a recovery.

Want to know what funds Amanda likes right now? It's easy to find out -- all you need is a subscription to Champion Funds. And while the newsletter service is so inexpensive that it'll pay for itself quickly, don't take my word for it -- judge for yourself with a free 30-day trial that will give you full access to current and past issues, along with plenty of other useful resources. In this market, that's an edge you can't afford to pass up.

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Fool contributor Dan Caplinger has recently added some mutual funds to his portfolio. He doesn't own shares of the companies mentioned. The Fool owns shares of CEMEX, which is a Motley Fool Global Gains recommendation and a Motley Fool Stock Advisor selection. US Bancorp and Total are Motley Fool Income Investor picks. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy is right for you.