ore than 100 of the Island's financial whizzes got together earlier this month to hear what could be in store for investment markets in the year ahead, and to cast their own predictions at where 2004 would take investors.

This all took place at the Bermuda Society of Financial Analysts (BSFA) annual forecasting dinner. Now in its third year, the annual dinner debate ? this year held at XL Capital ? has become a highlight for certified financial analysts (CFA) and other financial professionals. And it looks like its popularity can only grow as there are about 100 candidates preparing to sit either level one, two or three of the CFA examination in the next year.

Although the debating event (see the charted predictions made by the two 2004 debaters) draws a rapt crowd ? this year the BSFA reached maximum capacity of 120 participants ? those in attendance also get to have a bit of their own forecasting fun with a chance to make their own predictions for the year ahead.

Over the year, what happens in the markets is tracked and then the person who made the closest prediction to what became reality is named as the winner at the next year's event.

Questions in the forecast quiz included what is the best investment style in 2004 (growth or value), what would the Federal Reserve Board do in respect to interest rates (gradually increase, cut further or leave unchanged) to performance of difference US equity and international indexes, sector performance, and what commodities would perform best this year.

Joel Schaefer, president and CEO of Capital G Investments, announced the winner of the 2003 forecast, with the honours going to former head of the Bermuda Monetary Authority and now head of administration for Colonial Insurance,

The debate itself was moderated by Gregory Haycock, senior partner of the Bermuda office of KPMG, who was cited as being perfectly suited to the task having spent his career balancing credits and debits.

nd the presenters, both with strong opinions on the market, were (on the bullish side) Michael Burpee and (taking a bearish stance) Michael Gasior. Prior to the 20-minute presentations made by each asked each debater whom it would be best to listen to, but both diplomatically counselled that one should listen to the advise of both and then make up one's own mind.

Mr. Burpee, a 30-year veteran of the investment markets, told the audience that investment management was not like going to the horse races or the casino. "It is not gambling. There is a method, and that is doing a lot of research on companies. You do your homework, you do not just take a dart and throw it at a board," he said.

Mr. Burpee also pointed to a mistake some make in investing in that they think everything goes in a cycle instead of realising that there are two cycles ? political and economic ? that must be watched.

Mr. Burpee said his basic premise is that an economic cycle begins with a political cycle. What happens when going into an election ? at least two years before hand ? central banks lower interest rates, while at the federal level there is an increase in expenditure, currency declines and real money throws through the system. And that this was important for some of the larger economies; the UK, US, Germany, Japan, China and probably, France. He said investors should be aware of when presidential elections are planned.

aking a positive view of what could happen to the global economy in 2004, Mr. Burpee said: "I think the economies are in good economic condition - each have own particular weaknesses or strengths. On balance, global growth this year is going to be between three and five percent. The general economic outlook is still positive. And from an investor's point of view, the fear that I have is that someone is going to get it in their head to raise interest rates when inflation does not exist. This happening would change the valuation of securities," he said.

Mr. Burpee concluded that he was in agreement with Federal Reserve Board chairman Alan Greenspan when he said to be patient (as I am not sure where this is going).

Mr. Greenspan this week was bullish on the economy, saying that things were looking up for the US. But he also warned that budget deficits could put the country's economic health in jeopardy.

Michael Gasior painted a darker picture for the audience during his presentation. He recognised that he may be seen as the 'prince of darkness' but said he believes there are reasons to be concerned that the economy could slump further.

"I have been saying going on five to six years that there were lessons to be learned from Japan. I was using the word deflationary before it was common but the US is setting themselves up to mimic Japan (in its economic crisis of the 1990s). That is my worry. And that is why I am in the mood I am right now."

With that view, he said he saw economic recovery, any time soon as "tenuous at best".

Both debaters did agree that China's growth potential continued, although Mr. Burpee said that things were shifting for the country in that it would now also be importing, creating greater business opportunities for countries to trade with China.

ooking at the demographics, he said China's 1.4 billion population continued to grow, which meant employment levels had to keep increasing, with eight percent growth for employment pegged for this year.

The country also has the advantage of a large and a cheap labour force with Mr. Burpee saying that about half the population earned an average of $350 a year, and worked longer hours than the rest of the world, making it a formidable trading force.

"The important point in terms of trade is that China is replacing Japan as the US's largest trader. At the same time, China has to continue to grow and continue to be a strong trading partner which will include more and more countries, including Europe. But if China is going to grow at that rate, domestic consumption must also grow. It is a shift, but China is starting to import. There are increasing business opportunities with China."

Mr. Gasior said: "China is an amazing story, with 30 to 40 percent growth in output. You have got that, and (the possibility) of Japanese recovery."

With strong prospects for Asia, Mr. Gasior predicted the US dollar could decline further, "maybe even collapse".

"Some of you may be rolling your eyes at me, thinking you old guy. But I ask you, where are you going to get earnings. Any eruption in the stock market or housing market is what we have got left for stimulus. There is no where left to go. That is my own take. "We have problems with the level of debt, no way rates are going up in the short term and the stock market is tenuous; it could go bust."