"It's a mixed bag," says Jim Lowell, who sees signs of inflation and recession. In Fidelity Investor, he is adding stakes in Strategic Real Return (FSRRX) and Mega Cap Stock (FGRTX).

"In such a confused sea state, staying on course becomes as difficult as charting the course. Behind the curtains and on center stage, bailouts from the Fed and the Treasury may not only be too late to stave off recession, they may already be contributing to the other side of the current rate cut coin; inflation.

"The economic data is now making a compelling case for what the mood of the consumers and investors have been suggesting: recession is here at hand. At the same time, inflationary pressures are persisting and building in the headline prices of food and energy.

"In the bond markets, safe havens are hard to find in any shape or form. But, in the stock markets, bargains are beginning to crop up.

"The risks we see in the current landscape are myriad and all impose a cloud of uncertainty which continues to cast a pall over investors in the domestic and international markets.
 
"To account for the betwixt and between state of the economy and markets, we have added two funds to our portfolios -- Fidelity Strategic Real Return and Fidelity Mega Cap Stock.

"Mega Cap Stock (formerly known as Fidelity Growth & Income II) is managed by veteran stock picker Rick Mace and is, as it name implies, focused on mega cap multinationals; current and, I think, future beneficiaries of the global economy.

"Strategic Real Return, found in our Income Portfolio, is a composite of inflation protected bonds, floating-rate loans, commodity-linked notes, and REITs and as such helps us further diversify our income mix and better adjust to the volatile equity markets that lie ahead of us."