Deciding where wealth management clients should put their money this year is a daunting business, but investment executives at some banking companies seem to wholeheartedly agree on where it should not go: into Treasury bills.

"If you're overweight Treasuries, lighten up," said Christopher Ruth, the chief investment officer with the asset management arm of Comerica Bank in Dallas. "If you can sleep at night, underweight them."

Treasury bonds were the biggest winner in a rather tumultuous market last year, as nearly all categories of investments were crushed and investors flocked to the safer haven. But Ruth said that he is "hard-pressed to see how they'll be in the top tier of performers in 2009."

Ron Florance, director of asset allocation for the private bank of Wells Fargo in San Francisco, agreed. "Treasuries are hardly considered safe at these yields," he said. In recent interviews, Florance and executives at Comerica Inc., Huntington Bancshares of Columbus, Ohio, and First Horizon National Corp. in Memphis were strongly bullish to cautiously optimistic about the U.S. market.

"We think the stock market is still an extraordinarily good place to be," said Randy Bateman, the chief investment officer at Huntington, who cited bargain-basement price-to-book values on many stocks. Tax cuts, infrastructure spending, and other stimulus efforts should help fuel double-digit returns across the broad market in 2009, he said.

But Gerald Laurain, the chief investment officer at First Horizon's First Tennessee wealth management arm, said there are enough uncertainties to make the market as perilous as it is promising. Stocks' beaten-down prices are hard to resist, but long periods of price appreciation may not be in the cards, Laurain said.

"For the near term, it makes sense to take advantage of those securities that look relatively cheap," he said.

There is no predicting how President-elect Obama's planned stimulus package would affect inflation, Laurain said. So investors should remain flexible, he said.

"You have to be prepared to change your mind in a shorter time frame than you normally would," he said. "Normally, regional bank chief investment officers have more of a buy-and-hold mentality."

Laurain, however, argued that it is time for investors to be bold.

"2008 was all about getting risk out of portfolios, but 2009 is about getting risk back into portfolios, because I think you're going to get paid for it," he said.

He said that he would consider investing in large- and midcap companies, which he predicted will lead the market into recovery. Such companies have appealing valuations and will be the first to access credit as it loosens, he said.

Some foreign markets that took it on the chin last year could be good bets, Laurain said. Cheap stocks and economic expansion make Asia and South America good hunting grounds for stocks, with Eastern Europe a possible target for later in the year, he said.

Ruth said that he is particularly bullish on Brazil. With its "incredibly favorable" demographics, including a strong birth rate, the country can help both individual and institutional investors guard against future inflation, he said.

On the fixed-income side, Laurain said that he likes Treasury inflation-protected securities. They are "stupid-cheap," high-quality fixed income products that have high yield spreads over Treasuries, he said. Ruth said that the spreads will not last long and that it will be important to find and snap up high-quality munis and corporates quickly before their yields get squeezed.

Alternative investments, which largely bombed last year, hold promise in 2009, Laurain said. Real estate for storage, rental, and retail purposes "could be a good play," while commodities — not oil, but food and nongold metals — are a better hedge against inflation than are Treasuries, he said.

Speaking of commodities, managed futures can be a smart investment in times of geopolitical uncertainty — and "the world is in no danger of peace," Laurain said.

Huntington's Bateman said there is a good case to be made for options in the current environment. Some of the new money invested with Huntington is going into put and call option packages, he said. The opportunity is "really, really attractive because the volumes of this market have made option premiums so dramatic," he said.

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