Bermuda Investment Advisory Services (BIAS) is recommending their clients invest in health care, defence and diversified financial stocks over the short term.

Speaking at the second lunchtime War Counsel Forum entitled: `Understanding a New World of Uncertainty and Risk', held at BIAS headquarters yesterday, chief investment officer Robert Pires told clients that examining the way the market behaved during past crises may help to predict how the market would act during the current crisis.

Speakers at yesterday's forum included Mr. Pires, BIAS partner and senior investment analyst Mark Melvin CFA, Stuart Hrehoruk CFA, and CFA candidate Miguel DaPonte.

Mr. Hrehoruk said that highlights of the equity markets as at November 9 included the rebound in technology, earnings results being better than downgraded expectations, and the US Federal Reserve Bank, the European Central Bank (ECB) and the Bank of England cutting rates by 50 basis points in November amid concerns about deterioration in business conditions both in the US and abroad.

This means the US Federal reserve bank has reduced rates ten times so far this year, three times since September 11, and Mr. Pires said that traders were expecting a further cut, perhaps 25 basis points before the end of the year.

As far as healthcare stocks, BIAS is recommending Johnson and Johnson, Tenet Healthcare and Pfizer. Mr. Hrehoruk said that these stocks are "recession proof as people will always need prescriptions and medical care." Other positive factors include demographics favouring the industry and visible earnings with good free-flowing cash flow.

In the Capital Goods/Defence sector, BIAS is recommending Raytheon, Alliant Techsystems General Electric (GE) and Tyco.

Mr. Hrehoruk said: "The defence sector will benefit from increased federal spending particularly the systems support technologies and missile guidance systems."

And he said that GE and Bermuda-based Tyco International may lead the recovery.

As far as diversified financials, BIAS is recommending Citigroup and AIG as these companies have several streams of income rather than reliance on a specific area.

Valuations in the energy sector may also start to become more attractive.

Other stocks recommended by BIAS include AOL Time Warner, Capital One Financial, Cisco, Liberty Media, Nokia, Procter and Gamble, Telefonica, Veritas and Vodafone.

BIAS' watch list includes Bermuda-based ACE Ltd., Corning, Echostar, EMC, Bermuda-registered Global Crossing, Home Depot, JDS Uniphase, Merrill Lynch, NTT DoCoMo and Univision.