(FORTUNE Magazine) – Oh, what a blithesome spring it has been for investors. With a quick resolution to the Persian Gulf war, falling interest rates, and talk of the * economy rebounding, stocks have blossomed like a field of wildflowers. Even though the market has already provided investors with a full year's worth of gains in just three months, many Wall Streeters believe the growing season will continue. The mood on the Street is decidedly bullish, and nothing moves markets more than optimistic investors. For this quarterly report on how to manage your personal portfolio, FORTUNE sifted through different investments and found only a few compelling buys in real estate and commodities. Many portfolio strategists believe that stocks are the most attractive investment around now. For example, the asset allocation model at Merrill Lynch recommends a portfolio of 60% stocks, 35% bonds, and just 5% cash. Even with all the optimism over stocks, some money managers are becoming antsy. ''I don't know if we are two-thirds or three-quarters of the way to the top of this rally,'' says Alden Stewart, who runs $2 billion of equities for the Equitable, ''but I think the easy money has been made.'' Underlying Stewart's reservations is his fear that the interest rate decline that powered the market's advance may be running out of gas. As the Federal Reserve increased the money supply this year, Treasury bill rates slid from 6.48% in January to 5.68% recently. With rates down and many expecting the economy to turn soon, Wall Streeters worry the Fed is near the end of its rate cutting. If that's true, the market will need new stimulus to keep the bull charging. The best candidate: rising corporate earnings. Judging by P/E ratios, Wall Street is already anticipating an earnings outbreak. Standard & Poor's 500-stock index now fetches 17.5 times earnings. That multiple is markedly higher than the 13 considered average and is approaching the danger zone at 20. ''I think investors are ignoring weak earnings from early 1991 and are looking to 1992 and 1993,'' says Michael Schonberg, managing director of Chase Investors, who runs $6 billion in equities. While FORTUNE's economists fear inflation will rise, most economists believe that stable oil prices will help keep it in check, despite occasional jitters. With that beast tamed, interest rates should hold steady, a strong positive for stocks. Low, stable rates would encourage investors to continue abandoning CDs and skimpy money market yields and instead keep sluicing money into equity mutual funds. (See chart.) Coming in now, investors would be wise to focus on stocks with reliable earnings growth. Companies that drop profit bombs will continue to be punished hard; witness what happened to IBM. Marshall Acuff, the portfolio strategist at Smith Barney, recommends sticking with such tried and true names as Philip Morris and Baxter International: ''These stocks are not selling at premiums to the market, and their earnings are growing in the neighborhood of 20%.''

According to an indicator tracked by the Institute for Econometric Research in Fort Lauderdale, Florida, small stocks continue to offer enticing value. The institute's research shows that 47% of the stocks on the Amex, where many small companies trade, are selling below book value, compared with only 27% of all issues on the New York Stock Exchange. Amex stocks are cheaper even though that market has climbed 17.7% this year, vs. 13.3% for the Big Board. The Nasdaq has climbed even more, up 31.3%. For all that, many analysts are convinced that little stocks are just beginning a long-awaited run. Some top- performing small-stock funds include Hartwell Emerging Growth, Pennsylvania Mutual, and Oberweis Emerging Growth. The consummate contrarian, John Neff, portfolio manager of the top- performing $7.6 billion Windsor Fund, likes high-yielding stocks ripe for a turnaround. ''This market looks long in the tooth to me,'' says Neff, ''except for financial stocks with capital and real earnings.'' He likes BankAmerica, whose shares have doubled since last fall but still sell at a mere seven times earnings. Neff thinks Citicorp's management has been ''derelict'' but that the banking Goliath's consumer franchise is very much intact. He holds 20.7 million shares. He also owns Cigna, H.F. Ahmanson, and Aetna. ''These companies are in the catbird seat,'' says Neff, ''and they are still cheap.'' Economically sensitive stocks should be in the vanguard as the economy emerges from recession. Schonberg of Chase has been dabbling in cyclicals such as Intel and National Semiconductor. ''National has gone from $5 to $7 this spring, and it should earn $1 a share this year,'' he says. ''I see the stock heading to $12 in 18 months.'' He also favors steelmaker Nucor, which is expanding capacity and is expected to show strong earnings gains later this year. Stewart of the Equitable has been picking up a few cyclicals too, including Swissair and Delta, companies he believes will be winners in the airline dogfight. -- BONDS. Forget about that textbook maxim that bonds and stocks are supposed to move in sync. Today they are out of kilter. Although both markets started rallying last fall on hopes that the recession would end in a few months, bonds sputtered out in mid-February while stocks kept rising. Quantitative analysts like Richard Bernstein at Merrill Lynch say that if the equity markets are right, then long-term Treasuries should be yielding around 7.3%, instead of the 8.26% they offered recently. What's up? Bond buyers want proof that the worst will be over soon. Until they get it, prices will move up or down in response to every new economic statistic. Says Theresa Havell, director of fixed income securities at Neuberger & Berman : ''The bond market is focusing on details about the domestic economy, like inflation and unemployment. It is really having an argument with the stock market. One has to ask, Will the real market please stand up?'' What is a bond investor to do in the interim? The safest way to play this market is with intermediate Treasuries. Barbara Kenworthy, portfolio manager of the Dreyfus U.S. Government Bond fund, likes seven-year Treasuries because they pay 0.24 percentage points more than five-year notes, handily compensating buyers for the extra volatility of the longer-term issues. Plain-vanilla Treasury securities are attractive for several reasons. Apart from being supersafe and easy to sell, they will respond most quickly to any bond market rally. Another interest rate cut, for example, would send Treasury prices up faster than prices for corporate bonds or mortgage-backed securities. For now, both of the latter are trading within a narrow range above Treasuries, so they don't pay enough to make the risk of lagging worthwhile. The proliferation of global bond funds, which paid a rich 13.87% average total return in the 12 months ended March 31, has made it easier for armchair investors to cash in on higher interest rates abroad. But now is a risky time to take a foreign flier: With the dollar rising, currency losses could offset income gains. Is the junk market overvalued now after its recent surge? Mariel Clemensen, director of high-yield research for Citicorp's securities arm, thinks so and suggests that investors take their profits and run. Says she: ''There is no clear positive earnings picture, nor signs that companies can get sufficient equity capital to deleverage. We will see more weak results.'' So where can a bond lover invest these days and get a bargain? Try tax-free / municipals. A new surge of supply has temporarily buoyed yields. Munis now pay around 7.3%, or 89% of what comparable Treasuries offer, up from 84% some months ago. For investors in the 33% tax bracket, that's equivalent to a taxable 10.9%. The watchword in municipals, in these times of fiscal crises, is safety. Donald Carleton, a managing director at Scudder Stevens & Clark, believes that ten-year insured bonds offer the best buys. Insured bonds carry triple-A ratings, and in case of default their interest and principal payments are guaranteed by a third party like the Municipal Bond Investors Assurance Corp. Because of that price protection, funds that specialize in insured bonds have done better than the competition recently (see chart). Listed below are the top five insured funds with assets over $10 million. In uncertain times, opportunities to make money safely look particularly good. -- REAL ESTATE. Investors should be extremely selective here. Says David Shulman, director of real estate research for Salomon Brothers: ''Houses are getting a little better priced, but it's hard to make sense of the market.'' The Northeast remains the most depressed. The Pacific Northwest is cooling as it begins to suffer the same ills -- unemployment, overbuilding -- that have plagued the rest of the country. Maybe the biggest surprise: Houston. Credit the successful diversification of the local economy. The fact that there hasn't been a new office building in years doesn't hurt either. Says Mike Kirby, a principal of the real estate research firm Green Street Advisors: ''Houston is the best real estate story in the country.'' An excellent way to bet on this market is with Weingarten Realty, a real estate investment trust that holds primarily community shopping centers in Houston and surrounding cities. Says Kirby: ''Weingarten is a premier REIT with a healthy cash balance that will allow it to take advantage of other soft real estate markets.'' Weingarten yields a solid 6.8% and is expected to continue increasing dividends. Since most REITs have gotten pricey, you might look instead at Catellus Development, the real estate development company spun off from Santa Fe Pacific last year. Olympia & York and JMB Realty have each invested in the company. In addition to 277 buildings, Catellus owns 8,500 developable acres, mostly in Illinois, California, Texas, and Arizona. Real estate analyst Todd Schubert of Kemper Securities argues that with a net asset value around $30 per share, ''there's no question that Catellus should go up from $13 to the $20-per-share range.'' -- COMMODITIES. Not too much happening here. Gold has been trading from $350 to $420 and doesn't show any sign of moving out of that range. Says Edmund Serfaty, portfolio manager of the United Services Gold Shares fund: ''Before we see gold take off, Germany and Japan will have to lower interest rates; for the past year holding the deutsche mark has been like holding gold that pays interest.'' Maybe a better way to invest in gold is to buy stock in mining companies. American Barrick Resources, an improbably named Canadian outfit, has put a twinkle in the eye of John Tumazos, metals analyst at Donaldson Lufkin & Jenrette. For the past two years, the stock has delivered one of the best annual performances among all issues on the New York Stock Exchange. Says Tumazos: ''I expect American Barrick to double gold output and to triple earnings and cash flow per share by 1993.'' The real news in gold is that investors are again testing the waters in South Africa as President de Klerk continues to dismantle apartheid. This means that stocks of mining companies like Driefontein Consolidated Ltd., which trades as an American Depositary Receipt over the counter, will move back into the limelight. Driefontein is the premier South African gold-mining company. Noting that gold stocks appreciate in anticipation of a movement in the metal's price, fund manager Serfaty expects the stock to move up to $15 per ADR from its current $10.25. ''If gold goes to $400, Driefontein's profits will increase 33%.'' While investors wait for that move, the stock pays a 4.5% dividend.

BOX: WHAT THE HECK DO I DO NOW?

STOCKS -- What's left? Reliable earners, small company stocks, and fat cats in finance. Get ready for cyclicals. BONDS -- Stick with intermediate Treasuries and insured munis until inflation and unemployment signals are clear. REAL ESTATE -- Still in the doldrums, with even the Pacific Northwest feeling the blahs. One surprise: a recovering Houston. COMMODITIES -- Although the prices of precious metals have stagnated, you can find good values among mining stocks.

CHART: NOT AVAILABLE CREDIT: SOURCE: FACTS OF THE WEEK CAPTION: THE RUSH INTO STOCK FUNDS As interest rates have fallen and stocks climbed, investors have poured money into equity funds. Will this be enough to keep the bull charging?

CHART: NOT AVAILABLE CREDIT: SOURCE: LIPPER ANAYLTICAL SERVICES CAPTION: MUNI FUNDS SAFETY THAT PAYS: FIVE INSURED MUNI FUND WINNERS As states and cities face more budget crunches, insured municipal bonds look better than ever. Even in the case of default they retain their value, which makes for greater price stability over time.