The economy and financial markets could start to turnaround as early as 2010.

But it depends on how effectively the global credit crisis and US housing and banking crisis is dealt with in order for the traditional methods of economic stimulus, such as interest rate and tax cuts and Government spending, to take effect.

Meanwhile, investors need to take a realistic approach to managing their funds and make sure they have got the right risk profile for their investments.

That is the view of Robert Spector, chief economist at McLean Budden, based in Toronto, Canada, who, along with colleague and vice-president of the company, Hans van Monsjou, has been meeting with clients of Bermuda-based North Atlantic Asset Management, who manage investments for BF&M.

McLean Budden has been managing BF&M's Golden Accumulator Plan, which has an emphasis on government and corporate bonds, after a move away from equities.

Mr. Spector said it was important for investors to maintain a realistic outlook of the economy and financial markets, without being too optimistic or pessimistic, and to learn from past experience in the future.

"At this stage, we are targeting sometime in 2010 for a recovery, but it depends on a number of factors," he said.

"I am very much in the exercise of explaining, from a McLean Budden vantage point, historical periods where the economy was faced with a group of shocks similar to what we are seeing today.

"The global credit crisis and the US housing and banking crisis has spread and the introduction of those two factors created a deepening global recession with implications for worldwide trade flows, which certainly have shifted from a vigorous international trade to a very weak one, which in turn had an impact on commodity prices and the stock market went down significantly." But, Mr. Spector added that because this recession was different in its nature compared to any after World War II, the regular Government solutions to tackle the issue like interest rate cuts, tax cuts and spending would not begin to work unless the credit, housing and banking problems were addressed first.

"It seems to us that we will recover, but we need to see a more credible plan for dealing with the global banking crisis and the so-called toxic assets on the books of banks," he said. "Then the more traditional responses will take effect." And his advice to investors was to think about their investments in a realistic way and adapt their fund strategy to the current environment.

"This is certainly an environment where businesses, governments and anyone anywhere in the world need to have a strong balance sheet and cash in hand in order to weather the storm," he said.

"Every boom comes to an end and every bust comes to an end eventually and you do want to make sure that when you come out of this one you have got the spending power.

"It is not a time to be overly aggressive - it is a time for caution and selective risk-taking, not abundant risk-taking.

"It may take a little longer, but the goal is the same - to be one of those businesses that thrive when the cycle turns again."