Barrons: Your January picks -- auto bonds and some closed-end funds -- did well, especially relative to the market. How about a few new ideas? Bill Gross: Fairpoint Communications, a land-line phone company, acquired substantial properties from Verizon Communications [VZ]. Related to the deal, the dividend will fall to $1.03 from $1.59, for a yield of 11% for the next year.

Barrons: Your January picks -- auto bonds and some closed-end funds -- did well, especially relative to the market. How about a few new ideas? Bill Gross: JPMorgan Chase has a 7.9% preferred stock due April 29, 2049. This is the crème de la crème of banks today; the Fed loves [CEO] Jamie Dimon. Why shouldn't you? This preferred can be bought for 96 cents on the dollar, for a yield of 8%-plus.

Barrons: Your January picks -- auto bonds and some closed-end funds -- did well, especially relative to the market. How about a few new ideas? Bill Gross: Lastly, Countrywide Financial trades at a 10% discount to the price that Bank of America, its future parent, has agreed to pay in an all-stock deal. The deal will close in a few months, and Countrywide yields 10% while you wait.

Barrons: What stocks do well in this sort of market? Oscar Shafer: I've got two special situations. Tyco International sells for 43 a share and has a $21 billion market cap. After spinning off its health-care business into Covidien [COV] and electronics manufacturing into Tyco Electronics [TEL], the remaining Tyco is a diversified manufacturing and service company operating in several business segments. These include ADT, the nation's largest electronic-security provider; Flow Control, the largest manufacturer of flow-control products, and fire-protection, safety-products and electrical and metal-products businesses.

Barrons: Where is the stock? Oscar Shafer While the stock has run up 30% to 53-54 since the company reported its first quarter in April, there is at least 25% upside from current levels. Wall Street's estimate for this year is $3.36 a share. For next year, it's $4.10, and there is upside to both years' estimates. CommScope trades for 13 times '09 earnings. The market cap is $3.7 billion. With both Tyco and CommScope, we are betting on the management, not the economy. You have to focus on management that can execute despite headwinds.

Barrons: Which is the growth company? Archie MacAllaster: Wells Fargo. It has a major problem in home-equity loans, but has reserved well. The stock is about 25, and the range is 38 to 24.38. Wells has had the best growth of all the large banks for many years, and it still will. It is well run. It does three or four different kinds of business with its customers. The market has knocked its shares down too far. Wells Fargo earned $2.41 a share last year, and the estimate this year is $2 to $2.10. This, too, is well in excess of its dividend, which is $1.24 a share. The stock yields almost 5%. My earnings estimate for 2009 is $3.10 a share.

Barrons: Your speculative bet must be Bank of America. Archie MacAllaster: Yes, because they may cut the dividend. Bank of America offers the greatest potential. It's trading around 29, the low for the year. The high was 53. The dividend is $2.56 a share, and it yields about 8.6%. They don't have to cut the dividend, but with the yield over 8%, the market is saying they will. Bank of America's pending acquisition of Countrywide Financial has been criticized; people are worried about the size of the reserves they'll have to take against Countrywide's loans. Long term, the deal will be a positive, though it's going to take 18 months to two years. Bank of America also owns about 20 billion shares of China Construction Bank [939.Hong Kong]. It accounts for about $15 billion of the bank's market value. The first piece they purchased becomes marketable in October. They'll sell part of it. When they do, they'll have a big profit. That will allow them to offset some of the losses, and perhaps preserve the dividend. The bank earned $3.32 a share in 2007, and that's after taking big write-offs in the fourth quarter. My estimate for this year is $2.50 to $2.60, which is about equal to the $2.56 dividend. My 18-month target is $50 to $52.

Barrons: Thanks for the update. What's ahead? Scott Black: Analysts estimate the S&P 500 will earn $89.27 this year. Strategists say $79.25. If we use $84.25, which is in the middle, the P/E is 16. The market is fully valued. On a dividend-discount model, as well, it is efficient. In January and February we had the greatest opportunity to buy name-brand technology stocks since the Long Term Capital debacle in 1998. We bought Oracle [ORCL] at 12 times earnings, Texas Instruments [TXN], KLA-Tencor [KLAC], Xilinx [XLNX].