Faced with a bear market, the gut reaction of many investors is to pile into 'defensive' sectors: global tobacco stocks beat general retail by 32 per cent in 2007. But discriminating between companies matters too. In a bleak 2002, the best performing stock in each US sector outperformed the worst in its sector by 55 per cent on average using FTSE's index. Avoiding blow-ups is critical also. Ericsson and Nortel (NYSE:NT) jointly cut about 1 percentage point off global equity returns from their 2000 peak to trough.

Selecting defensive stocks means abandoning the bad analytical habits that have prospered over the last two years (fans of buy-out simulations, that means you). Instead, scrutiny of three factors may prove important. First, operating leverage, or the sensitivity of profits to changes in sales. This is often measured by the proportion of costs that are 'fixed' and thus hard to cut if sales fall. But low margins are also dangerous. Take two companies, both with half of their costs fixed and both facing a 5 per cent decline in sales. Lame Inc with 5 per cent margins will see profits half. Awesome Co, with 10 per cent margins, will only see profits decline by a quarter.

The second factor, financial gearing, amplifies operating leverage for equity holders. Quoted companies overall have lower net debt relative to profits than in 2000-2003, although profits are cyclically higher. In any case some individual business will need to cut debt.

How quickly this process takes is largely determined by the third factor, liquidity - or the cash and unused

Investors in renewable energy stocks have long been on a journey to the promised land, with the European sector almost doubling in 2007. But this year has begun in retreat, with most stocks down 20-30 per cent from their December peaks, led by the solar panel manufacturers.

In part this reflects a broader change in attitudes to risk as markets wobble. But there may also be a reassessment of the heroic assumptions share prices embody. Societe Generale, for example, takes the forecasts of the trade body, EPIA, for growth for the solar power market out to 2030, and then assumes that operating margins can be sustained at a hefty 20 per cent. Even then the bank finds that bellwethers Q-Cells and SolarWorld are over valued.

Small changes in the variables produce big swings in valuation, and solar stocks are largely a bet that solar can eventually reach the point of "grid parity" - where its cost matches that of fossil fuel-based power generation. Yet even if one assumes that solar power becomes a mainstream source of energy, the manufacturers of equipment face two problems in the shorter term.

First, the easing of supply side restraints. The shortage of key raw material polysilicon, used to make most panels, has supported manufacturers' prices and margins. But most observers expect supply of polysilicon to rise from 2009 onwards. Second, manufacturers' capacity may soon exceed immediate demand. EPIA's

Thanks to automatic 401(k) plans and one-stop investing options, saving for retirement is a cinch.

Retirement savings plans are undergoing an extreme makeover. After decades of trying to teach Americans how to save and invest for their own retirement -- with mixed success -- employers have come up with a simple solution: They'll do it for you.

Thanks to automatic enrollment in 401(k)s and other retirement plans, plus streamlined investment options, saving is so effortless that you can't help but succeed. And that's true whether you're starting your career, switching jobs or planning your exit.

To help their employees compensate for disappearing pensions and declining Social Security benefits, more than one-third of large companies have already embraced the new reality of retirement saving: the automatic 401(k). That's up from just 19% in 2005.

More than half of all employers expect to offer automatic enrollment this year. The trend also applies to 403(b) retirement plans for teachers and employees of nonprofit organ-izations, as well as to the 457 plans that many state and local governments use. "Now you'll succeed at saving for retirement even if you don't do anything," says Jeff Maggioncalda, president of Financial Engines, a pioneer in providing

WASHINGTON (AP) -- Consumer prices rose in 2007 at the fastest pace in 17 years as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills. However, falling prices for clothing and new cars offset some of those gains.

The Labor Department reported that consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006. Both energy and food prices jumped by the largest amount since 1990.

Prices were also up sharply for health care, housing and education. However, these gains were offset somewhat by falling prices for clothing, new cars and computers.

Workers' wages failed to keep up with the higher inflation. Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the fourth decline in the past five years. The lagging wage gains are cited as a chief reason many workers have growing anxiety about their economic futures.

Core inflation, which excludes both energy and food, rose 2.4 percent last year, slightly lower than the 2.6 percent increase of 2006. It is the performance of core inflation that the Fed closely monitors.

Analysts said the slight drop in core inflation for 2007 plus various reports showing the economy is in the