NEW YORK (CNN/Money) - When fund managers look back on the summer of 2002, they might be tempted to borrow a phrase from Charles Dickens: It was the best of times, it was the worst of times.

In July, funds were slapped silly by stock losses and massive redemptions. In August, they got some relief from the heat thanks to a rally that may -- or may not -- have legs. Along the way, they've grappled with fickle stocks, even more fickle investors, and a market with a mind of its own.

So how are fund managers doing during this long and unforgettable summer? Here's a look at three veteran stock pickers and the careful dance they've choreographed to make it to Labor Day.

Mike Stead, manager of the $621 million SIFE Specialized Financial Services Fund, is like a hawk sitting atop a building on Wall Street. The more turbulent the times are, the hungrier he gets.

What these funds did this summer:       Wells Fargo Specialized Financial Services - sold and bought J.P. Morgan Transamerica Premier Equity - fought the 'WorldCom' effect Mosaic Investors - hung onto drug stocks

"Emotionally irrational selling is a godsend," Stead said with a grin. "You have to take advantage of price swings."

So when the whispers on Wall Street in late June said J.P. Morgan Chase would miss its second-quarter earnings, he sold his entire position July 1 -- more than 1 million shares -- at $31.57 per share. Over the next three weeks, amid news that J.P. Morgan was one of two banks that loaned Enron more than $8 billion, the stock fell 36 percent.

By late July, satisfied that the worst was over, Stead made his move, purchasing back the entire position within a matter of days at a price of around $25 a share. Even on a late-August day when the stock was down 2.79 percent on news that J.P. Morgan faces a downgrade, Stead is still happy -- he made $2 million on the trade.

"I would argue the management is not as effective and gifted as other players," Stead explained. "But the one thing about J.P. Morgan is it's an extremely valuable franchise. I would advocate that when the stock gets cheap, you really want to own it for other reasons than how it's being run today."

The fund, with J.P. Morgan as the No. 4 holding, is down 2.8 percent year to date through Aug. 21, putting it in the top quarter of its category, according to Morningstar. Other top holdings include Washington Mutual, expanding from a regional to a national player with a five-year expected growth rate of 13 percent; and Compass Bancshares, which is building a solid franchise in states that include Texas and Florida.

The No. 3 holding is Citigroup, a cornerstone of Stead's portfolio for years. He admits some "bias" -- he started his career at Citigroup about 35 years ago, working in a variety of positions in South America and New York. There's no bank that does the job better, he says, and Citigroup CEO Sanford Weill has "made money consistently for his investors." Stead isn't concerned that Weil may be part of a probe into analysts' practices at Salomon Smith Barney.

"It could be an opportunity to buy," he said.

Jeff Van Harte, manager of the $100 million Transamerica Premier Equity, was on vacation the day the WorldCom scandal broke in late June. Lucky for him, it was the last day of his vacation.

Not because he owned the troubled telecom in his large-cap fund, but because of the WorldCom ripple effect. His media holdings -- Liberty Media, Cox Communications, EchoStar Communications, Clear Channel Communications -- were crushed in July.

Echostar, which had traded around $25 a share, went as low as $14. Cox slid from around $35 to $20. The market was in a "controlled crash." The fund, meanwhile, took it on the chin, down around 30 percent.

Van Harte faced redemptions making day-to-day cash levels a chore to manage. But he resisted selling his battered stocks and his patience paid off. Clear Channel is up 50 percent from its summer trough, while Liberty is up nearly 47 percent. EchoStar is up nearly 34 percent, while Cox is up 28 percent. The fund is now down about 22 percent.

"I can never remember a time like this," said Van Harte, who started at Transamerica in 1980 as a securities trader. "It's been a memorable summer."

Looking ahead, one of the big unknowns is the will of the consumer, Van Harte said. One of his top retail stocks in the fund, Radio Shack, fell recently after lowering its quarterly earnings outlook because of sharply weaker sales. Wal-Mart, another holding, also warned of lower sales later in the year.

"The market is showing signs of recovery but consumer spending is slowing," Van Harte said.

Rich Eisinger, vice president and portfolio manager at Mosaic Funds, was astonished to watch former ImClone Systems CEO Sam Waksal dragged off in handcuffs after his arrest in June on insider trading charges. The next thought was about Bristol-Myers Squibb, a top holding of Mosaic Investors, a large-cap blend fund with a 15 percent weighting in drug stocks. (Click here to check the drug stocks on CNN/Money.)

He thought: Why didn't Bristol-Myers do its homework before getting tangled up in a partnership with ImClone in marketing the cancer drug Erbitrux?

The sector, needless to say, took a pounding. Pfizer went as low as $25, about a 25 percent drop from the start of the summer, while Johnson & Johnson dipped to $42 a share, nearly a 30 percent dip in the same time frame. Mosaic started bargain shopping in late July.

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"These are high-quality names that were good buys," he said. "The selling in drug stocks was overdone."

Just when things couldn't get any worse, a rally came out of the blue. Bristol-Myers came back from its coma, rising nearly 20 percent, while Johnson & Johnson gained 29 percent and Pfizer jumped nearly 33 percent.

"It looked like the whole market was going to hell at one point and now you've got a real bounce," Eisinger said.

Despite the recent volatility, Eisinger is upbeat about the sector looking forward three-to-five years. "These are times you look to set yourself up for the next several years."

Still, Eisinger isn't convinced the rally is here for good. Some bears don't go into hibernation when summer says goodbye.