Confidence is slowly but steadily returning to the financial markets as investors seek to take advantage of the opportunities on offer.

That is according to Robert Almeida, investment officer and fixed income institutional portfolio manager at MFS Investment Management, who was giving a presentation on 'The Economic Crisis and How to think about it Past, Present and Future' hosted by Capital G Ltd. at a round-table luncheon discussion held at Café Lido and attended by 30 clients and concerned investors yesterday.

Mr. Almeida, who was joined by Joel Schaefer, president and CEO of CapitalG Investments Ltd., talked about a range of topics from the bottom of the market, what was needed to get back into the markets and the impact of the US Government stimulus package, to the effect of the global economic downturn on Bermuda and the best place to invest money.

He said that hopefully investors had seen the market bottom out and the equity markets were looking beyond this year to try and work out a growth rate for 2010.

But Mr. Almeida added that, coinciding with the market rebound, over the past four to five weeks there had been some signs of stabilisation.

Mr. Schaefer said the past two months had proved that the world was not coming to an end as many had predicted, however, while the market conditions had improved, there was still a long way to go.

"What we are seeing now is interest from individual investors,"he said.

"Some investors said 'I want out' at the beginning of the year and now some are coming in and saying 'We want in because we are missing an opportunity'."

Mr. Schaefer said the market had bounced back by 30 to 35 percent, but it was very unusual for it to make that sort of movement without some kind of correction. "We fully expect there will be some kind of retrenchment and we do not know what will drive that,"he said.

"There have been movements in Ace and XL locally from exceedingly low levels to levels that are just low."

He reckons there will be a knock-on effect from the market recovery on Bermuda's economy, but there would be a time lag compared to larger countries because of the Island's links to the tourism industry, as people decide to go on holiday again and start to feel secure in their jobs and paying their mortgages.

Allied to this, Mr. Schaefer said there were also a number of changes to the international business sector, with a reduction in the amount of work permit holders leading to less money being spent in restaurants, lower rental income and loss of business for Belco and landline and mobile phone operators and other utility providers.

"A lot of it is driven by cash flow, so Bermuda will trail behind our largest markets,"he said.

"It is encouraging to see the rate of change is slowing, but until we start to see a pick up in our tourism numbers and our employment numbers and the construction industry in Bermuda, we need to make sure that we keep our belts tightened and understand where we focus our energies."

Mr. Schaefer said the key was for investors to take a diversified approach to managing their portfolios, with an asset allocation that was structured against risk to be well-positioned to make the most of participating in the recovery.

The last word went to Mr. Almeida, who said the best strategy was to put your money into quality investments.

"Whether it is stocks or bonds, quality is at a discount and it is offering you a good reward and if things do take a turn for the worse, you want to be in quality," he said.