(MONEY Magazine) – With the bull market celebrating its first birthday, we thought it would be a good time to look back on some of our recent investing picks and pans. Here are some of our best and worst calls, and our updated take on what's next for each stock or sector.

Best: Caution on pharma

We argued in our April 2003 story "Drug Stocks Go Cold" that only a few big pharmaceutical companies were positioned to thrive; the others were suffering from a severe lack of real innovation that would jeopardize their growth for years to come. The market seems to agree: Large-cap drug stocks have gained just 17% in the past 12 months, compared with 38% for the S&P 500. We saw some hope for Abbott Laboratories, AstraZeneca and Pfizer, among others; our picks are up an average of 25% since that recommendation. The three stocks we said to avoid--Johnson & Johnson, Merck and Schering-Plough--fell an average of 3.3%. AND NOW? The dynamics of the industry haven't changed, but some price/earnings ratios have dropped, attracting some smart investors. Val Jensen of the Jensen fund recently picked up more J&J shares, and former Mutual Shares manager Michael Price (see page 121) is high on Merck. For bargain hunters, we think both of these stocks are now worth considering.

Best: Tyco to rebound

Former CEO Dennis Kozlowski's $6,000 shower curtain made for amusing late-night talk show humor, but it also gave us one of our best stock picks of the past two years. As reports of Kozlowski's misdeeds unfolded, Tyco stock plummeted 86% in the first half of 2002. But a month after Kozlowski's resignation, we began to think the market had overreacted: As we noted in our August 2002 story "Is Tyco Finally Worth the Gamble?" most of Tyco's core businesses (such as security and health care) were still solid despite the scandal. Since then, the stock has rebounded 93%. New CEO Ed Breen is reducing debt and shoring up the company's credibility. Tyco's profits last quarter were higher than Wall Street forecasts. AND NOW? Breen's initial results have been impressive, but the turnaround will get harder from here, and the stock's no longer cheap: At a recent $28, with a P/E of 22, Tyco trades about on a par with the S&P.

Best: Oil stays up

Just before American troops marched into Iraq last year, the price of oil spiked to $37 a barrel. Many believed that a quick resolution to the war would bring down prices just as quickly, but we argued in our March 2003 story "Oil: the X Factor" that other supply pressures (such as the strikes in Venezuela, one of the largest U.S. suppliers) were likely to keep oil prices above $25 a barrel for the remainder of the year. They did--and in late February, oil was back up to $36.

That's been a boon for oil production and oil services companies. Our best picks were services company Schlumberger, up 71%, and Canadian oil company Suncor, up 54%. AND NOW? As the worldwide economy gathers steam, lack of supply remains a significant issue. Oil prices are unlikely to return to their former average of $18 to $20 a barrel in the near future. That means energy stocks have only begun to realize their potential gains.

Best: Buy CGM Realty Fund

You didn't need to rent, rehab or own a single piece of property to profit from the recent real estate boom. In our December 2002 real estate package, we suggested CGM Realty as an easy way to get some real estate exposure in your portfolio. Last year, manager Ken Heebner's well-timed bet on home-building stocks such as D.R. Horton and Lennar helped the fund return a smoking 90%. AND NOW? CGM Realty's 10-year track record speaks for itself: It's in the top 1% of its category. This fund is a keeper.

Worst: Go on defense

When President Bush announced ambitious plans for beefing up homeland security, the defense industry seemed like a natural winner. In late 2002 we recommended contractor Northrop Grumman and missile-systems maker Raytheon. But so far, the extra federal defense dollars haven't generated much profit for investors; Northrop Grumman and Raytheon have returned just 8.5% and 4.6%, respectively, since we made our calls. We were surprised by Northrop's ongoing problems with digesting its recent acquisition of TRW. Raytheon has suffered from delays and cost overruns plus pension woes. AND NOW? Election years are traditionally kind to defense stocks, yet with a forward P/E of 23, Raytheon isn't cheap. But Northrop Grumman, at 17 times expected earnings, is still attractive.

Worst: Gold won't glitter

We dissed this notoriously volatile asset class twice in 2003 ("Is Gold a Buy?" in March and "Going for Gold" in May). We figured the bull market in gold was a temporary phenomenon caused by political instability (the Iraq war), a weak economy and sluggish stock prices. But as the dollar got weaker throughout the year, gold prices continued to soar, topping $400 an ounce (the highest in more than seven years) in late '03. AND NOW? We still believe there's little long-term growth in gold; buying gold is basically a bet that nothing else will grow. For the long term, we remain convinced that you're better off in stocks.

Worst: Giving up on Mickey D

It's never easy to spot exactly when a troubled company is about to turn a corner, but we missed a big change at McDonald's ("Back in the Kitchen," July 2003). Although we liked new CEO Jim Cantalupo's back-to-basics strategy, we didn't think it would be enough. But we underestimated how fast the public would respond to simple fixes like cleaner restaurants. By January the company had reported five straight months of double-digit U.S. same-store sales growth, and the stock has gained over 50% since we made our call. AND NOW? We think that Cantalupo may have found the right recipe to lure back customers. Although another quick 50% pop isn't likely, it's a reasonable buy. --CYBELE WEISSER