Determining the best industries to invest in for 2009—and the ones to avoid—requires keeping an open mind about what's considered bad or good.

You could, for example, employ the "bird in the hand" philosophy to select industries that have been—relatively speaking in a disastrous 2008—the most resilient and that retain positive near-term prospects.

A riskier alternative is to pursue the "bird in the bush" strategy that seeks industries so far down that improvement seems likely. You just need to grab the eventual winners, a demanding task.

"The only businesses that will thrive in 2009 are pawnshops and bankruptcy firms," says John Buckingham, chief executive and chief investment officer for Al Frank Asset Management, in Laguna Beach, Calif. "Having said that, however, we think the best areas for investment will be those industries and companies beaten up the most in the past year."

It requires a leap of faith to believe the embattled economy can return to its basic strengths with the industries that hurt us the most regaining our confidence. But that's been the smartest investment path coming out of every recession.

"Focus on where we can be strong again," says James Hardesty, president and chief economist of Hardesty Capital Management, in Baltimore, who believes that the strongest banks will prosper once the housing market revives. "Housing led us down the hill into the valley we're in, and it is going to have to be part of what leads us out."

Economic revival arrives in fits and starts, with companies often receiving both positive and negative effects, so examine all facets of a company.

"Though people might think aluminum stocks would do well if infrastructure spending rebounded in 2009, that's not really the case," says Sam Stovall, senior investment strategist for Standard & Poor's Corp., in New York. "Aluminum is geared toward the auto industry, and even with the bailout, there is still a lot of inventory to work through."

Because bad sometimes turns worse, avoid aluminum companies such as Alcoa Inc., Stovall says. He also worries about the hotel, casino, and gaming industry because families are unlikely to spend a lot of money on holidays when money is tight. He has "sell" recommendations on the stocks of Carnival Corp., Royal Caribbean Cruises Ltd., Wynn Resorts Ltd., Marriott International Inc., and Intercontinental Hotels Group PLC.

Avoid the auto industry as well because "going to Washington with a tin cup" was a bad signal to consumers and investors, Hardesty says.

"Do you really think the Chevrolet Volt (a plug-in electric car scheduled to appear in late 2010) is going to get GM to the promised land?" Hardesty says. "It is betting the whole company on something that might or might not work."

Telecommunications is yet another worry. Though he expects that industry will eventually be a bonanza, Hardesty sees no certainty about which companies will dominate.

"Our feeling is that we've hit bottom with oil prices, and with drilling and exploration cut back, supply will be less available when the economy turns around," Stovall says. "Integrated oil and gas looks attractive, and it is dominated by Exxon Mobil Corp."

In retailing, hypermarkets and supercenters such as BJ's Wholesale Club Inc. and Wal-Mart Stores Inc. have momentum as consumers continue to trade down and seek bargains, Stovall says.

Unlike Hardesty, Stovall sees opportunity because telecommunications stocks such as AT&T Inc. and Frontier Communications Corp. have been hit so hard. They still feature good earnings growth prospects, low valuations, and high dividend yields. He also likes drug retailing, particularly CVS Caremark Corp., because drugstore chains will be managing pharmacy benefits to work directly with the government in controlling costs.

Buckingham recommends these embattled industries:

•Telecommunications/technology: Mobile phone maker Nokia Corp. has cash and a strong dividend.

•Aerospace and defense: Boeing Co. will benefit as airlines enjoy lower fuel costs and order more planes.

•Restaurants: Cheesecake Factory Inc. reflects dire news that may not materialize. It is cheap and has a strong brand and balance sheet.

•Apparel: VF Corp., maker of popular clothing such as Nautica, the North Face, and Wrangler, will excel once consumers return.

•Retailing: GameStop Corp., retailer of computer and video games, is equipped to navigate the economic storm.

Meanwhile, Hardesty favors these:

•Banks: JP Morgan Chase & Co., Bank of America Corp., and Wells Fargo Co. will share in a housing recovery. If you're aggressive, consider Citigroup Inc. because the government won't let it fail.

•Retailing: Target Corp. and Kohl's Corp. at the lower end of the market and Tiffany & Co. at the high end have loyal customers and good business models.

•Infrastructure: Caterpillar Inc. and Deere & Co. offer global potential, especially in China and India.

•Entertainment: Walt Disney Co. is a worldwide franchise, and people always will want to be entertained.

•Pharmaceuticals: Pfizer Inc., Merck & Co., and Bristol-Myers Squibb Co. have cash to team up with biotech firms for new drug therapies.