The outlook, Take 2

El-Erian, whose firm manages $841 billion, believes a new, conservative consumer attitude toward spending and saving decisions, slowing economic growth, are lasting byproducts of last year’s financial meltdown. That means modest investment returns for the foreseeable future.

“We are on a bumpy journey to the new normal,’’ says El-Erian, a former president of Harvard University’s endowment manager. “The world is not going to look like what it looked like from 2003 to 2007. We’re moving from a world growing mainly on the back of US consumption fueled by debt to a world of lower but more balanced growth.’’

To him, that means a greater emphasis on high quality investments and lower returns in the future.

El-Erian, whose firm invests mostly in bonds, believes stocks are overshooting economic reality right now because safer investment options offer practically no return.

Cash moves into stocks and drives up prices. Meanwhile, corporate profit growth will be hard to maintain because improvements this year were achieved mostly by slashing expenses.

“I would be careful about being overexposed to the equity market at this point,’’ says El-Erian. “There will be better buying opportunities down the road.’’

Black, president of Delphi Management Inc. in Boston, would be the first person to tell you his real gift lies in finding individual stock gems and not forecasting the market’s big picture. But he sees plenty of warning signs.

“The market has become disconnected from the reality of the economy,’’ says Black. “While the economy isn’t falling off a cliff the way it was, it’s scraping along the bottom. I think there’s a big disconnect between what’s happening on Wall Street and how the average person is suffering on Main Street.’’

Black is optimistic the economy will revive slowly next year - but just like last year, he advises investors to remain conservative with their money. But he believes stock prices already reflect a degree of improvement that will take longer to materialize than investors expect. “I think we’re [anticipating] much too far ahead,’’ he says.

While cautious, Black always has a list of bargain stocks close at hand. Prompted for a few names, he mentioned the biotech company Cephalon Inc. and Petroleum Development Corp., an oil and gas business.

But Black says it’s harder to find undervalued stocks now. “The market’s well picked over,’’ he says.

Patel sees growing stability in the most dangerous parts of the economy - the banking system and real estate - as a good foundation for better times to come soon.

“We’ve clearly seen an inflection point from a deteriorating economy. The developing markets have been recovering first and they’re telegraphing what’s going to happen in the developed world.’’

Patel disagrees with investors and analysts who anticipate a mopey economy and a reversal in the stock market, which has soared more than 50 percent since its March lows. She points to ultralow interest rates on money market funds and US government bonds as incentives for investors to put more of their cash in stocks and other riskier securities.

“I think the market is going to confound the negative thinkers and have a very strong finish to the year,’’ she says. “What’s the competition? You don’t really need to earn that much from common stocks or high-yield bonds’’ to beat the investment alternatives. “This is the year the risk takers will continue to be rewarded as they have in the year to date.’’

When it comes to her mutual fund portfolios, Patel looks for investments in cyclically sensitive parts of the economy, like energy and materials. She’s also interested in companies that sell products in the world’s development markets, where economic growth is more pronounced.

Lynch, who now is vice chairman of the investment advisory arm of Fidelity’s mutual funds, noted that stocks still haven’t recovered all their recent losses. And Lynch figures stocks are bound to climb further as the economy recovers.

“We’ve had 11 recessions and 11 recoveries’’ since World War II, Lynch says. “I believe we’ll have a 12th recovery. Companies will be earning a lot more money and stocks will go up.’’

Just don’t ask Lynch to predict exactly when the market will go up further. Lynch admits he was fully invested in stocks over the past few years, watching his portfolio shrivel like other investors. And though he’s certain stocks will go up in the next decade or two, he’s less sure about the short term.

“I have no idea what it’s going to do in the next year,’’ Lynch says. “You can call the psychic hot line and see if that works. You just don’t know what it’s going to do.’’

Lynch wouldn’t recommend any specific stocks or industries. But he preached the importance of diversity - investing in a basket of promising companies. Some will fizzle. But others might increase 25 or 50 fold, more than offsetting the duds, something he found when he managed Fidelity’s Magellan Fund for 13 years.

“I think on the whole we’re on the mend and things should be improving over the next couple years,’’ he says. But he adds: “It’s going to be a slow ramp up. . . . There’s been some damage done during this downturn.’’

Moreover, Carey worries that the recent stock market run-up may not be fully justified by corporate profits and the improvement in the economy. “We’ve had such a surge in share prices, and earnings haven’t kept up,’’ Carey said, suggesting it’s possible the stock market could fall again. “You might see some correction for the market in the near term.’’

That makes it harder to find bargains in the stock market. So instead of hunting for bargains, Carey is investing in solid companies that he believes have strong prospects over the next three to five years. Carey’s $5.4 billion Pioneer Fund has placed particularly big bets on Chevron Corp., the giant oil company, and Norfolk Southern Corp., a major railroad. The fund has continued to invest in every major sector.

For average investors, Carey has two pieces of advice:

First, don’t try to time the market. He pointed out that many investors who jumped out of the market when it fell sharply also missed out on the sharp gains over the past five months - compounding their losses. “We’ve never found any market timing technique that was very good,’’ Carey says.

Second, don’t put all your money in one place. Carey recommends people invest in a mix of small and large companies, real estate, and other investments - whether it’s life insurance or postage stamps. “Keep it diversified,’’ he says. “That’s safer. Something will always be up and something will always be down.’’

Steven Syre can be reached at syre@globe.com; Todd Wallack at twallack@globe.com.