For anybody with a stake in stock mutual funds, the next sustained market rally will bear close watching.

Such a rally is bound to come along some time, don’t you think? Nothing in the world is forever, not even a bear market.

A rebound stands to give us a better gauge than we’ve had so far of how the pressures of the longest stock-price decline in a generation have affected the styles and psyches of fund managers.

As long as the tough going continues, it’s hard to see which funds are going to come out the other side in good shape and which might not. Given the way the bears have roughed up almost all rapid-growth stocks, investors in any sort of aggressive stock fund could hardly expect the managers to dodge the damage.

About the only way they could have done that would have been to make a massive market-timing bet some time in late 1999 or early 2000, jumping out of computer, telecommunications and other growth stocks into some other sector of the market or else, to pull money out of stocks altogether and put it in bonds or money-market securities.

But investors spent most of the 1990s bull market telling managers never to make such “Monty Python” (as in “and now for something completely different”) moves. If managers jumped around within the stock market, they were castigated for “style drift;” if they went to bonds or cash and lagged behind the stock indexes as a result, they sometimes lost their jobs.

Out in the rain

By the turn of the millennium, everybody who owned a fund full of high-tech stocks knew, or should have known, that when the next downpour hit the market they were going to get wet.

When the skies start to clear, though, it will be a different story. “If the market comes back and these funds don’t, that’s going to be trouble,” says Tom Lydon, a financial planner and president of Global Trends Investments in Newport Beach, who manages $70 million for 90 clients.

I’ve yet to hear any aggressive-growth managers tell the world they have lost their nerve and will be buying nothing but non-California electric utilities from now on.

At Janus Capital Corp., whose funds have taken some high-profile losses in the bear market, managers are “sticking with what we’ve always done,” Chairman Tom Bailey said in a yearend letter. “That means we don’t sell top-tier companies to buy second-tier companies simply because the market has hit our favorites hard.”

The proof of such statements will come when the market perks up. This doesn’t have to be a full-blown rise back toward the old highs, but it ought to be something more substantial than the bounce we saw earlier this month.

Much damage

Even in a kindlier climate, it will take some doing for any aggressive growth fund to get back all its old zip. At the height of the bull market, investors pumped a steady flow of new cash into these funds. As long as managers were putting that money in stocks they owned already, the advance enjoyed a momentum of its own.

Now those same funds may be faced with outflows, rather than inflows, and may need to keep cash in reserve to deal with that drain. If history is any guide, battered funds will be coping with those after-effects quite a while beyond the bear market’s official end.

After the worst period for the stock market in the last 50 years ended in late 1974, according to Investment Company Institute data, the number of shareholder accounts in funds kept declining each year until 1982.

Disillusionment is surely less pervasive now. And what else are platoons of retirement savers going to do but keep feeding their 401(k) money into funds of one type or another?

Even so, it’s prudent to expect that the next stock market advance will take a different character from the last one, favoring new types of stocks. Another boom in dot-com stocks isn’t going to happen.

The Internet won’t go away, by any means. But investors will have to learn new ways to look at it. Let’s have a stock market rally so that that education can begin.

Chet Currier is a columnist for Bloomberg News.