Financial expert John Mauldin suggests that those looking for an investment opportunity should hang onto their cash for the time being.

The prolific author and investment manager, who was in Bermuda last week to speak at the Chartered Financial Analysts Society of Bermuda annual forecast dinner, told The Royal Gazette that he did not expect the US economy to resume growing until next year.

That suggests a lean time ahead for the Bermuda's economy, as the Island's dominant insurance, financial services and tourism sectors are all heavily dependent on American money.

Mr. Mauldin has written three New York Times best-sellers, including "Just One Things" and "Bullseye Investing", and his free economic newsletter "Thoughts From The Frontline" is read by more than one million readers each week. Asked what he would advise someone with a sum to invest for a 10- to 15-year period, Mr. Mauldin said: "I would wait for the economy to at least start moving sideways.

"Cash is a position — it doesn't pay very much, but it is a safe investment position. In times like these, it doesn't pay to gamble.

"I was advising people to get out of stocks two years ago. In a recession, stocks drop more than 40 percent. Why would you want to set yourself up for that kind of pain?"

Stocks have already fallen more than 40 percent from their October 2007 highs and Mr. Mauldin, who is president of Dallas-based Millennium Wave Investments, would not be surprised to see share prices tumbling by another 15 to 20 percent before any recovery starts. "Maybe in late summer, after the markets have been really trashed, it will be a better time to start looking at stocks again, because the stock market will recover ahead of the economy," Mr. Mauldin said. "I think the economy will be contracting for all of 2009, but we will move back into positive territory in 2010. Growth will be very slow at first and maybe not until 2011 or 2012 will we begin to see growth that investors can be comfortable with."

Unemployment — figures to be released this week may show the US jobless rate has risen to 7.5 percent — will continue to rise for four to six months after the recession ends, Mr. Mauldin predicted, as unemployment is a lagging indicator.

The housing slump has been at the root of America's economic problems, but credit problems are continuing to spread. "We've got multiple bubbles bursting," Mr. Mauldin said. "It will take two years to work through the overhang in the housing market."

Mr. Mauldin prefers to look at investing from the point of view of asset classes, rather than stocks and bonds of individual companies. "I think people sometimes spend too much time agonising over a particular stock, when they should be looking at asset classes," Mr. Mauldin said. "When an asset class moves, everything in that asset class tends to move together."

The $820 billion economic stimulus plan being considered by the US Congress will not inject money into the economy quickly enough to be effective, Mr. Mauldin believes.

Looking ahead, Mr. Mauldin said he would rather invest in developing countries than developed, provided those countries can boast general good governance and the rule of law. Brazil, China and South Africa are countries he would invest in, while Russia, Venezuela and Ecuador are too risky, in his opinion.