This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.

"France Telecom (NYSE: FTE) -- my top pick for 2009 -- is one the world's best-managed telecom companies," says global expert Nick Lanyi in his income-focused advisory service, High-Yield International.

Lanyi states, "The dominant provider of wireline phone service in France, FTE also is the leading wireless provider in the country and a major wireless and broadband-Internet provider throughout Europe.

"About 40% of the company's profits come from outside of France, including exposure to emerging markets with excellent long-term growth potential, including Poland and several African countries.

"FTE has invested heavily in Voice over Internet Protocol (VoIP), and its leadership in this area -- 5.4 million customers in France -- has given it a foot in the door in many homes, allowing the company to generate strong sales growth for its high-speed Internet services. FTE has relatively strong profit margins and has succeeded in cutting costs in recent years.

I am the Global Editor at MoneyShow.com and each week I interview an investing expert. This week, I spoke with Allan Nichols, editor of Morningstar InternationalInvestor, who identifies the pitfalls and opportunities in global market today.

Q. Allan, how can investors protect themselves should the financial crisis in the US result in prolonged bear markets around the world?

A. Studies have shown the majority of returns from the stock market have been concentrated over a relatively few days, so it is important to have some exposure. My experience, though, has shown bear markets last longer than you think. Asset allocation is particularly important and I would increase cash from my bond allocation rather than from my stocks. Now is the time to buy really high-quality stocks at attractive prices, those that have sustainable advantages, or what Morningstar calls "moats."

Morningstar borrowed the concept of a moat from Warren Buffett. Just as a moat around a castle protected the castle from invaders, a company's moat protects the firm from competition. Moats can be generated from being the low-cost producer; having intangible assets, such as patents or other unique intellectual property; and high switching costs that make it uneconomical to change to another product or service. All of these improve a firm's ability to compete as well as earn returns above its cost of capital.

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. But every once in a while an exception is made, and with the aforementioned in mind France Telecom is worth a review.

France Telecom SA (ADR) (NYSE: FTE) is a major telecommunications provider in France and also operates broadband, IP protocol, and audio-visual content businesses.

Analysts really like FTE's 49% market share of France's broadband market. Analysts also expect France Telecom's broadband business to offset a decline in landline telephone revenue in FY 2008.

MOST NOTEWORTHY: Host Hotels, Packeteer and France Telecom were today's noteworthy downgrades:

• Deutsche Bank downgraded shares of Host Hotels (NYSE: HST) to Hold from Buy and lowered their target to $19 from $22.50 on a lack of near-term catalysts and industry headwinds. Note the firm also downgraded Sunstone Hotel Investors (NYSE: SHO), Strategic Hotels (NYSE: BEE) and DiamondRock Hospitality (NYSE: DRH) to Hold from Buy.
• Merriman downgraded shares of Packeteer (NASDAQ: PKTR) to Neutral from Buy following the acquisition bid by Blue Coat Systems (NASDAQ: BCSI) as they are not expecting additional suitors to emerge.
  
• ABN Amro cut France Telecom (NYSE: FTE) to Hold from Buy as they see increased risk from the company's acquisitions strategy.

OTHER DOWNGRADES:

• Keefe Bruyette downgraded Capitol Federal (NASDAQ: CFFN) to Underperform from Market Perform.
  
• Omnicell (NASDAQ: OMCL) was lowered to Neutral from Strong Buy at Broadpoint.
  
• National City (NYSE: NCC) was downgraded at Bear to Underperform from Outperform.

MAJOR PAPERS:

• The Wall Street Journal's "Heard on the Street" reported that VCG Special Opportunities Master Fund, a $58M asset hedge fund which is owned by an investment firm that also owns a Puerto Rican investment bank, is separately suing Citigroup Incorporated (NYSE: C) and Wachovia Corporation (NYSE: WB) for requiring it to pay money from "credit default swaps" as the value of mortgage backed bonds fell.

OTHER PAPERS:

• In an attempt to cut back its growth plans due to higher fuel costs, AirTran Holdings Inc (NYSE: AAI) CEO Bob Fornaro said the Orlando-based airline will sell two jets next month. The Orlando Sentinel reported that record fuel costs could also impact AirTran's negotiations with its pilots union.
• Fnac is in talks with Apple Inc (NASDAQ: AAPL) to sell the iPhone in France, Le Figaro reported. The head of PPR SA's Fnac Chain, Denis Olivennes, said France Telecom's (NYSE: FTE) exclusivity rights for the iPhone in France are "inadmissible."

WEB SITES:

• Bloomberg reported that the head of Dubai International Capital, Sameer al-Ansari, said that as losses increase from the subprime mortgage market turmoil, Citigroup may need additional capital from outside investors.

The big run-up in shares in Asia did not make it over to Europe. Concerns about the global economy still appear to be too great.

At 5 AM New York time, the FTSE was off .9% to 5,688. Commodity proxy and miner BHP Billiton (NYSE: BHP) was off 3.7%, GlaxoSmithKline (NYSE: GSK) was off 2.1%, so Big Pharma did not appear to be making a comeback.

In Germany, the DAXX fell off 1.7% to 6,658. Multi-national Siemens (NYSE: SI) held its own, down only 0.4%.

In France, the CAC 40 was down .8% to 4,805. France Telecom (NYSE: FTE) sank 2.3% to 23.25. But global financial services company AXA (NYSE: AXA) rose .7%.

Data from Reuters.

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• UBS AG (NYSE: UBS) is launching an initiative to reduce proprietary risk taking by its investment banking division, the Financial Times reported. In an internal memo, UBS CEO Marcel Rohner wrote that the bank would cut by 50% the number of its employees in its real estate and securitization division, and move its troubled mortgage investments into a separate unit.

OTHER PAPERS:

• The UK Times reported that British music company EMI Group PLC (OTC: EMIPY) has made a bid for Chrysalis, one of Britain's last big independent music companies.
• Student loan giant SLM Corporation (NYSE: SLM), also known as Sallie Mae, said it would lay off 350 employees, or about 3% of its workers, the Washington Post said.
• France Telecom (NYSE: FTE) CEO Didier Lombard said sales of Apple Inc's (NASDAQ: AAPL) iPhone device are going better than expected in France, the Associated Press reported.

Many analysts and investors tried to bury WiMAX technology a few weeks ago after Sprint Nextel (NYSE: S) decided to walk away from its WiMAX business. News today says Israeli WiMAX pioneer Alvarion (NASDAQ: ALVR) and European fixed-line giant France Telecom (NYSE: FTE) may be teaming up in a deal estimated to be worth $20 million for Alvarion.

My buddy Zack Miller had a great piece a couple of weeks back on why Israeli WiMAX companies may have a big advantage. Alvarion has created a thriving WiMAX business in emerging markets, and these markets tend to be first movers when it comes to technology like this. Let's not forget that widespread cellphone use and technological advances didn't start in the U.S. In the U.S. everyone had a fixed line that worked. In places like Israel, just to get a line from the phone company could have taken you months.

So what happened? As a way around this, cellphone technology surfaced, and now everyone has a cellphone. Same thing in other emerging markets. Who's not to say that the same thing won't happen with WiMAX? It'll catch on and get really big in emerging markets, and then will get picked up throughout the U.S.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer owns stock in ALVR and is long, he has no position in any other stock mentioned as of 12/05/07.

MOST NOTEWORTHY: Trident Microsystems, Comcast, Level 3 Communications, Ambac Financial and MBIA Inc were today's noteworthy downgrades:

• Jefferies downgraded shares of Trident Microsystems Inc (NASDAQ: TRID) to Hold from Buy and lowered their target to $9 from $20 following the company's mixed quarter as they expect TRID to lose share in the TV market and face increasing price pressure. Shares were also downgraded to Hold from Buy at Deutsche Bank. Oppenheimer lowered Trident to Neutral from Buy, citing disappointing December guidance, delay in TV ramp, and expectations that 2008 will be a peak year for TV chip ramp revenues.
• CIBC downgraded shares of Comcast Corporation (NASDAQ: CMCSA) to Sector Performer from Outperformer following the weak Q3 results to reflect increasing competition in telco video, slower broadband growth and the weakening economy.
• JP Morgan downgraded Level 3 Communications Inc (NASDAQ: LVLT) to Neutral from Outperform following disappointing Q3 results and guidance.
• Friedman Billings downgraded shares of Ambac Financial Group Inc (NYSE: ABK) and MBIA Inc (NYSE: MBI) to Market Perform from Outperform citing lack of near-term catalysts and uncertainty surrounding the credit markets.

OTHER DOWNGRADES:

• Banc of America lowered its rating on Eli Lilly and Company (NYSE: LLY) to Neutral from Buy.
• WestLB downgraded GlaxoSmithKline PLC (NYSE: GSK) to Sell from Add.
• Societe Generale downgraded France Telecom (NYSE: FTE) to Hold from Buy.
• Franklin Resources Inc (NYSE: BEN) was downgraded to Market Perform from Outperform at Friedman Billings and at Keefe Bruyette.

MAJOR PAPERS:

• News Corp.'s (NYSE: NWS) MySpace is investing heavily in games to go along with its successful music and video offerings, and beginning in January, thanks to a deal with games distributor Oberon, will offer hundreds of free "casual" games, reported the Wall Street Journal (subscription required).
  
• The European Court of Justice in Luxembourg overturned a law that had been on the books in Germany since 1960 to prevent hostile foreign takeovers, reported the Wall Street Journal. The immediate result is expected to be a takeover attempt by Porsche, a 31% holder of Volkswagen (OTC: VLKAY) shares.

OTHER PAPERS:

• Mobile Telecom company France Telecom (NYSE: FTE) is close to creating a joint venture for long distance operations in India with Indian optical storage manufacturer Moser Baer, reported the Economic Times.
• British financial services company HSBC Holdings (NYSE: HBC) is looking to sell Marbles, the online credit card business it acquired in 2003, reported the Independent.
• The first undersea telecommunications cable linking China and the U.S. -- called the Trans-Pacific Express -- has begun to be constructed, reports the Associated Press, and it's expected to be in place before the Beijing Olympics next July. Verizon Communications (NYSE: VZ) is involved and says the cable will be 11,000 miles long and cost about $500M.

Apple (NASDAQ: AAPL) has begun to round up the press for a big news conference next Tuesday. The event will be in London and will probably cover Apple's plans for its iPhone in the UK, France, and Germany.

Apple's PR machine does not know how to do anything small, so it is expected that the company will say that it will "hand a UK sale deal to Spanish Telefonica's O2 UK unit, a German deal to Deutsche Telekom's (NYSE:DT) T-Mobile and a French deal to France Telecom's (NYSE: FTE) Orange."

With the iPhone's price already dropped, sales in Europe can be expected to be strong.

The product, however, has at least two problems as it moves overseas. One is that the phone is currently a 2.5G product while Europe cellular users are, in many cases, already on 3G networks. Apple would need a short time table to get a next-generation product to market.

The other issue with the iPhone is that technology pirates have figured out how to "unlock" the device so that it can work on more than one cellular network. It is too early to say whether this will affect the exclusivity that Apple is seeking from network partners, but it at least raises the question of how easy it will be to force consumers to stay with one provider.

Now it's on to Asia.

Douglas A. McIntyre is a partner at 24/7 Wall St.

When BloggingStocks contributor Georges Yared recently took a look at lenders that could rise up out of the recent subprime-related credit mess, he focused on Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and US Bancorp (NYSE: USB) as strong contenders.

Well, the European markets have been struggling with many of the same credit concerns as in the U.S. Morningstar (NASDAQ: MORN) has gone looking for investment opportunities in European markets, and found such contenders as Alcatel-Lucent (NYSE: ALU), France Telecom (NYSE: FTE), and Cadbury Schweppes (NYSE: CSG). However, like Mr. Yared, Morningstar analysts found themselves focusing on a pair of wide-moat lenders that had been unfairly punished by reactions to the current problems.

"Investors have shied away from the big telcos in recent years because of concerns that their traditional businesses were shrinking," notes George Putnam III, an expert in uncovering turnarounds.

But now, he explains, "After years of concern about the cable companies invading their turf, the big telecoms are now well positioned to fight back."

In his The Turnaround Letter, the advisor looks at seven leaders in the global telecom space, all of which he says represent global leaders, with dominant positions in their local markets and the "potential to grow steadily by expanding the services they offer."

AT&T (NYSE: T) Putnam notes, gained control of Cingular Wireless due to its merger with Bellsouth. The renamed AT&T Wireless, he says, will account for about 35% of AT&T's revenues.

The advisor observes, "In addition to a strong wireless presence, AT&T is rolling out fiber-based landline services. With revenues expected to be north of $120 billion in 2007 and substantial operating cash flow, AT&T is a force to be reckoned with." Further, he notes, the dividend was just raised for the 22nd consecutive year, and the company is expected to repurchase roughly $7 billion worth of stock in 2007.

MAJOR PAPERS:

• The 19.4B sale of Clear Channel Communications Inc (NYSE: CCU) to Bain Capital and Thomas H. Lee Partners is expected to proceed quickly as major shareholders Highfields Capital Management and Fidelity Investments are expected to agree to a new proposal raising the sale bid by 20 cents to $39.20 a share, reported the Wall Street Journal.
• Last month stent implants in the U.S. fell 15% to 71,200 from April 2006, signaling that they may no longer be a strong growth area for the medical industry, reported the Wall Street Journal.
• A new EU law that would slash the roaming charges for mobile phone calls by Europeans when they are traveling on the continent is expected to cut into the profits of companies including Vodafone Group (NYSE: VOD), France Telecom ADS (NYSE: FTE), and Telefonica SA ADS (NYSE: TEF) , reported the Financial Times.

OTHER PAPERS:

• EMI Group (OTC: EMIPY) has opened its books to rival Warner Music Group (WMG), setting up a four-way bidding war, reported The Business.
• New explorations by PetroChina Company Limited's (NYSE: PTR) parent company, China National Petroleum Corp, have found that the Jidong Nanpu Oilfield in Bohai Bay may have more reserves than previously estimated, reported China Daily.

MAJOR PAPERS:

• The Wall Street Journal reported that New Century Financial Corporation (OTC: NEWC) is expected to announce as soon as today that it is filing for bankruptcy projection.
• The Wall Street Journal reported that EMI Group plc (OTC: EMIPY) will hold a special media event on Monday with Apple Inc's (NASDAQ: AAPL) CEO Steve Jobs as its special guest, fueling speculation that EMI will sell music without anti-piracy software.
• The Financial Times reported that the U.S. and South Korea said they had agreed on the terms of a landmark free trade deal which will boost trade by as much as $20B a year.
• The Financial Times reported that French stock market regulators are looking into unusual share price movements in France Telecom ADS (NYSE: FTE) and a few other CAC40 stocks, as there is concern that unknown forces could be profiting from false rumors and speculation in the stocks.

OTHER PAPERS:

• The U.K. Times has learned that GlaxoSmithKline plc ADR (NYSE: GSK) is in talks with the World Health Organization, or WHO, over a proposal for a subsidized mass avian flu vaccine for developing countries.

WEBSITES:

• According to an internal memo obtained by SUSE-IRC.org, Microsoft Corporation (NASDAQ: MSFT) is in talks to acquire Novell Inc (NASDAQ: NOVL).