Now is a good time to invest in equity markets as the world is in the initial phases of a "synchronised recovery" according to Mr. E.T. Bob Richards, president and chief investment officer of Bermuda Asset Management.

Speaking at the weekly lunch meeting of the Hamilton Rotary Club, Mr. Richards said that while investors should not expect the resumption of another "blue sky investment bubble," the new bull market would "scale the wall of worry."

However, he said there was still plenty to worry about such as global terrorism, Middle East violence, tensions in the subcontinent and retaliations for US steel tariffs.

"But the fundamentals have definitely shifted from negative to positive and thus it is a good time to invest," said Mr. Richards. Following the turn of the Millennium, the world experienced a synchronised economic slow down which was unusual and Mr. Richards said: "Synchronised slowdowns are worse than unsynchronised ones, but the silver lining is that synchronised recoveries are more powerful than unsynchronised ones."

He said the synchronised global recoveries in 1987, 1994 and 1999 had four common aspects; rising commodity prices, strong earnings growth, interest rate hikes and US dollar weakness.

Evaluating these trends, Mr. Richards said stocks were likely to outperform bonds and investors had to get back into the stock market.

"Economic cycles are like Snow White's seven dwarfs; they're all very similar but none are exactly the same. So don't look for the same growth stories of the last market," said Mr. Richards who added that although technology, particularly telecoms, were likely to lag the market for some time they would eventually rebound.

He also said that some of the most attractive cyclical plays were in Japan and Asia, sectors that export to the US.

"The domestic situation in Japan is starting to improve creating interesting opportunities there as the Tokyo market has underperformed the world equity markets every year but one since 1990, many stocks are remarkable cheap," said Mr. Richards. He also said that hardening commodity markets would be favourable for the natural resource and basic industry sectors, especially in Canada and Australia.

Citing evidence of an economic recovery, Mr. Richards said: "In the US, productivity grew about 7 percent in the first quarter and should remain strong for the rest of the year. This means that unit labour costs are falling, thus, on the macro front keeping inflation down, and on the micro front, widening margins and increasing earnings.

"Benign CPI figures, coupled with strong increases in productivity confirm the lack of the threat of inflation for the rest of the year," he said.

Although the capital goods sector had been the major laggard, Mr. Richards said: "We believe a major growth spurt in capital goods is imminent."

Mr. Richards said there had been plenty of water under the bridge since the bursting of the dot-com bubble or as Federal Reserve Chairman Alan Greenspan called it, "irrational exuberance."

The question now said Mr. Richards was: "Has irrational exuberance been replaced by irrational scepticism in the wake of the Enron scandal."

Mr. Richards also asked: "After all, if you can't trust auditors who can you trust? If you can't rely on audited financial statements, how can anyone ever value corporations and their common shares?"