Smart skeptics.

IN sophisticated investment circles, you seldom see the words "savvy" and "bullish" in the same sentence.

The smart money got that way by being skeptical, if not cynical, and scrupulously contrarian. Since the majority is usually bullish, the inescapable conclusion is that to be smart is to be a bear.

There is, I grant you, an element of reason in all of this.

But if it's such an advisable way for me to think as an investor, how come it doesn't make me rich?

Five years ago, smart skeptics everywhere warned correctly that the stock market had strayed into Fantasyland. Steve Leuthold, publisher of an "Internet insanity index," was one. "This stock market segment has become a mania, one which will likely replace tulip bulbs as the classic example of a speculative market bubble," he said then.

Sure enough, the next five years brought the worst setback for stocks in a generation. Yet over those five years, according to Morningstar Inc., the average bear-market fund that seeks to profit from declining stock prices has produced an average LOSS of 5.3 percent a year.

What about hedge funds, which supposedly contain the world's best investment minds? Hedge funds have been kicking the tar out of conventional mutual funds these last few years.

And yet, Bloomberg data show that for the past 10 calendar years, the CSFB/Tremont Hedge Fund Index, with an annual return of 11.1 percent, has barely outpaced the Standard & Poor's 500 Index, which has gained 10.9 percent a year.

Investors may sagely conclude that, hard as it may be to make money as a stock-market bull, it is even harder to succeed as a skeptic or cynic. In an economy that tends to grow over time, a bullish point of view at least gives you a chance to go with the flow.

Still not convinced? Then consider an eye-catching piece of research by three economists.

In a business setting, their study found, "moderately overconfident or optimistic managers make decisions that are in the better interest of shareholders than do rational managers.

"Risk-averse rational managers will postpone the decision to exercise real options longer than is in the best interest of shareholders," the study said.

The Cockeyed Optimist effect is familiar in many aspects of modern economic life. Notice how people keep opening restaurants, ignoring warnings that something like two-thirds of all such enterprises will fail in the first five years. Ssh, don't tell them!

Do I advocate reckless overconfidence in investing? Of course not. It's foolish to ignore measures such as diversification or overestimate one's own money-management skills.

None of this deters prudent optimists, who aren't in the game for bragging rights. Their lack of interest in proving how smart they are helps make them smarter than they look.