New York -- Buy stocks in recessions. That's a simple, effective market-timing rule that investors find woefully hard to follow. You'll drive 50 miles to a factory outlet to buy a coat at 50 percent off. But when a scary recession puts stocks on sale, you're afraid to touch them until prices are back up again.
Take 1990, when the U.S. economy was in the pits. Had you bought shares in the Vanguard Index Trust 500 Portfolio, a mutual fund that mimics the Standard & Poor's 500-stock average, in September of that year, your investment would be up a comfortable 48 percent, despite the market's recent weakness.
If you flubbed that opportunity, however, don't pause to mourn. Another recession is staring investors in the face, this one covering much of Europe. Rising German interest rates helped throw the European markets into a funk. When those rates come down again, stock prices will rise across the continent.
Here's a trio of mutual funds for investors to consider: Baltimore-based T. Rowe Price's European Stock Fund, up 5.8 percent since January (547-2000,  638-5660) and Vanguard's IndexEurope, up 6 percent ( 662-2739 in Valley Forge, Pa.), neither of which carries a sales charge; and Fidelity Europe, up 7 percent ( 544-8888 in Boston), with a 2 percent sales charge. These are all "open-ended" funds. You buy directly from the mutual-fund company, paying the current net value of the stocks in the portfolio.
The funds that concentrate on single countries are typically "closed-end," which means they trade on a stock exchange. You buy from a stockbroker rather than from the fund itself (discount stockbrokers are the cheapest).
The market price for a closed-end fund is sometimes higher than the value of the stocks in its portfolio, which is not the time to buy. You should start getting interested, however, when you see the fund priced at 15 percent less than the value of the stocks it holds. This information is carried by the Wall Street Journal and other newspapers.
Money manager Steve Leuthold of the Leuthold Group in Minneapolis thinks you should take a look at three German closed-end funds, all selling at an attractive discount.
The Emerging Germany Fund is priced around 16 percent under the current value of the stocks it holds, and the New Germany Fund is 15 percent under value. Both invest in small- and medium-sized companies. For blue chip stocks, try the Future Germany Fund, at a 16.5 percent discount.
For a bet on two of the world's cheapest markets, get the Growth Fund of Spain and the Italy Fund.
John Hickling, who manages several of Fidelity's foreign-stock funds, suggests an Asian fund that includes some Japanese stocks. Last week, the Nikkei index crashed to 59 percent below its 1989 peak, and a number of prominent analysts think it has a lot farther to fall.
But who knows? In hindsight, recessions and crashes create tremendous values for investors who buy stocks and hold them for long periods of time. Don't buy into Japan with a single lump sum, professional investors advise. Instead, "dollar average" by buying shares every month over the next 12 to 18 months. If prices fall farther, this strategy nets you a lower average price.
Here's another trio of open-ended funds: Fidelity Pacific Basin (2 percent sales charge, mostly sold directly by the Fidelity Group), G.T. Pacific Growth and Merrill Lynch Pacific. The latter two are ,, sold primarily by commissioned stockbrokers.
At current prices, Europe and Asia look far more promising than the U.S. market. "Get real," Mr. Leuthold tells plungers who cut their investing teeth in the rich market of the 1980s. The period just ended was the second best in all stock market history, outdone only by the late 1940s to 1950s. Anyone looking for a repeat performance in the 1990s, Mr. Leuthold says, with his usual understatement, "belongs in a mental institution."
Historically, one- and three-year returns, from high valuation levels like today's, have averaged only 3 percent annually, Mr. Leuthold says. Ten-year returns have averaged 6 percent annually, dividends included. That makes today's 10-year Treasuries, at a riskless 7.3 percent, potentially a better buy. In the United States, that is. For more excitement, look abroad.