course for the year without any nasty surprises expected.

Jeffrey Brewer, Managing Director of Case International, said the company's strategy was to reduce its exposure to the larger capitalised companies and buy into the middle range stocks. Those are the ones in the $500 million to $1 billion market capitalisation range.

"Those companies have significantly underperformed over the last year and over the last three years,'' he said. "It's a global bull market so you need to be more selective from a portfolio management standpoint. I like a challenge. We screen 4,200 companies and clearly on our screens Coca-Cola is not coming up as the most undervalued company. There are other companies which have either missed a quarter for whatever reason or they are just not on the top of everybody's list. Looking forward to the second half of this year you'll see the secondary markets continue to play catch-up.'' Case International acts as a sub-advisor to the Bank of N.T. Butterfield and Son Ltd.'s Buttress equity fund. Another Case strategy has been to lighten up in the UK market and go overweight in Japan.

"I am concerned long term what is going to happen with a Labour government,'' Mr. Brewer said. "It is really untested ground over there unlike the US where you have the Democrats controlling the presidency but the Republicans controlling Congress. So you have checks and balances.'' This past week the concern in Europe has been what was going to happen in the French elections over the weekend with the Socialists set to take power.

"The European markets have had a phenomenal run up this year and have done well,'' he said. "We have overweighted Japan up to this point and have done fairly well. We are concerned about the currency but it seems to have stabilised. We play the exporters and currency is a major impact. The Sonys of Japan are reporting super earnings. We still think the Japanese market is an opportunity. That's probably unfortunately the consensus by a lot of the major houses which are now starting to heat up to Japan.'' Among stock picks the Buttress equity fund recently bought Toys "R'' Us, Inc.

Case is also recommending Deere & Co. and Cracker Barrel Old Country Store, Inc.

"We think Toys "R'' Us has attractive value,'' he said. "It went through some difficulties last year and seems to have turned the corner with some cost cutting and some new sales objectives. In the long term we love Deere. We have it in a lot of portfolios. The farm cycle has turned very positive this year and all the farm stocks are starting to report very good earnings. In the smaller cap area we pick Cracker Barrel. It's a country store restaurant format with good growth prospects and has consistently done better than the restaurant industry which has underperformed.'' In the technology sector Mr. Brewer has stuck with the leading players such as Intel Corp. (whose share price plunged Friday by 7.5 percent on a below estimate earnings report), Compaq Computer Corp. and Cabletron Systems, Inc.

In its balanced portfolios Case has started to increase bond holdings because yields on the long bonds are up in the seven percent range. If rates go up significantly the company will evaluate its position on equities but Mr.

Brewer doesn't think that will happen. He doesn't believe inflation will be a problem and earnings still look solid.

"I'm not in the timing business but rather than rotating out of equities I would say be more selective,'' Mr. Brewer said. "We continue to find a lot of companies coming up on our screen. One of our measures is insider activity.

There continues to be a lot of insider buying in the medium cap area. There is a lot more insider selling in the large cap ... As long as you are careful and avoid the landmines along the way you should be alright.'' Over at the Bank of Bermuda Ltd., Patrick Dell, head of the international equity section, said the strategy has been to recommend trimming equity and bond positions in favour of cash.

Analysts there recommend that the average investor keep 50 percent of their holdings in equities, 35 percent in bonds, and 15 percent in cash. That's a change from the bank's recommendation of 55 percent in equities and 40 percent in bonds, a neutral position, Mr. Dell said.

"We think people should have a reasonable amount of cash in their portfolio,'' he said. "Different investors of course have different criteria and different requirements and ages. The 15 percent in cash is very much at the top of the range. The maximum is 20 percent. We are near the top end of that. It reflects our caution. It's good to have a reasonable spread. If you are more risk adverse you would have a few more bonds in your portfolio, and if you're young with lots of money you can afford to have a higher equity component. If fear and greed has been great inducers of professional fund managers like ourselves fear has probably predominated more.'' In an equity portfolio the bank's analysts are recommending a 44 percent weighting in the US, 33 percent in Europe, 17 percent in Japan and six in the Pacific Rim countries.

In the US Mr. Dell is still keen on the pharmaceutical, health and retail sectors and neutral on technology stocks.

"There are areas that have underperformed and haven't kept up that look attractive but we would stress we still favour those stocks where there is a visibility of earnings,'' he said. "For those stocks that have disappointed estimates the market is absolutely ruthless. It is a very very unforgiving market. Spread your risk.'' The analysts like the fundamentals in continental Europe, particularly Germany, France, the Netherlands and Switzerland, and Japan. There the markets have benefited from relatively weak currencies against the US dollar.

"One of the biggest scares we had in Japan was that the increase in taxation to cover government debt might kill the recovery in its track,'' he said. "We haven't seen this. The economic numbers that have been coming out have been bullish. Even with the consumption tax the economy is in fine shape. It's not strong enough to raise rates and it's strong enough to keep corporate activity going along at a reasonable level. It's the same as continental Europe. Those countries have an economy that is growing not fast enough to warrant an interest rate rise and clearly corporations are benefiting from that. We have a very modestly priced currency and a monetary policy that remains pretty expansionary.'' Ann Kast, President of Kast Investment Management, sees a continuation of the global bull markets unless a series of fundamental indicators go haywire.

"I am long term bullish on financial assets in general because of the well entrenched fundamentals that have developed over recent years -- low interest rates, low inflation, the opening up of free trade, the billions of new consumers in the Third World, the fall of the Berlin Wall, the downsizing of governments and corporations, the enormous growth of technology that is coming into its own in terms of productivity -- all are very good factors for stocks and bonds,'' she said. "These fundamentals are so strong that to dislodge this bull in financial assets would take a series of these to get off track rather than just one or two. So it looks very well entrenched for the long haul and bodes well for investors.'' Over the short term a downturn wouldn't surprise anyone but Ms Kast does not see any such cloud on the horizon.

"What seems to be happening is that when markets go down they tend to go down sharply, quickly and for a short period of time and then resume the upward momentum,'' she said. "The worse case for any investor would be a repeat of the 73-74 bear markets. I don't see that out there.'' She said that markets tend to go up two-thirds of the time, down 20 percent of the time and continue on a level momentum the rest of the time. The big risk is being out of the market. On the local front she's pleased to see the Bermuda Stock Exchange index rising slowly but surely.

"It seems to be firming up,'' she said. "People seem to be realising good value in dividends and good value in the quality companies. I wouldn't be surprised if the change in leadership had something to do with it.'' The new hospital bond issue looks attractive to her. She's also keen to see what will happen when the Government bond issue matures in November. She believes that when that money is unleashed investors will be looking to pick up more assets.

"It's going to be interesting to see how that money gets redeployed,'' she said. "People will reinvest that one way or another.'' Randy Somerville, Vice President of investment services for First Bermuda Securities Ltd., says analysts there believe there is still going to be lots of volatility in the US market.

"Everyone is trying to guess what Fed is going to do as far as interest rates,'' he said. "Everyone is still speculating. Still the earnings are out for the first quarter so there is nothing to feed on. The market is going to meander around. The US market will still have a trend upwards but no nervousness as far as a big correction coming.'' Analysts predict smooth sailing From Page 9 He believes investors could consider taking some profits from the larger capitalised stocks and allocating a little more to the smaller and mid-sized ones which have lagged behind in performance. He believes a strong US dollar could hurt the larger capitalised companies with foreign exchange transactions.

"Everybody has been so in love with the big caps because they are big and liquid and if there was a bit of correction people feel they can get out of them quickly,'' he said.

He favours the banking, leisure and gaming sectors in the US. Outside of North America he favours Far Eastern markets such as Hong Kong and China for investors with a long term view. He is not keen on Japan.

"There is still too much to cook out of the system there,'' he said. "There are banking problems, real estate problems and economic problems. I am not really pushing Japan at this point.'' Europe is still "reasonably good'' because of the strong US dollar and its effect on helping make exporters there more competitive.

Chris Hough, an investment advisor with GulfStream Financial Ltd., also recommends taking some profits out of the US market in the larger companies.

"It's prudent to be taking profits if there are profits to be taken with the Dow anywhere near 7250,'' he said. On Friday the Dow closed at 7331.04. He favours technology (his speciality) and communications stocks, and the oil and gas sector. He is staying away from the fixed income markets.

"We are entering a fixed income bear market,'' Mr. Hough said. "We are at the very beginnings of that. At this point you have to be very selective when you go into fixed income products. We are recommending to our clients to stay away from those products and give them a very low weighting.'' He believes its going to be a bumpy ride on the markets for the rest of the year. Investors should take profits when they can and be cautious.

"It should still be a good year,'' he said. "There is a lot of opportunity in the Pacific Rim where the markets have typically been hurt in the last couple years. The smart money is buying good issues in good companies in Malaysia, Indonesia, South Korea and Thailand but you have to be selective.

There is a lot of upside in those markets going into the year 2000. That's for long term holds.'' Among his technology sector stock picks are FORE Systems, Inc., Kulicke & Soffa Industries, Inc. and ACT Networks, Inc. with core holdings in Microsoft and Intel.

Ann Kast