Keep faith in your investments - that is the message from one of Bermuda's top asset management bosses in the face of the recent credit crunch and subsequent fall in the world stock market.

London's FTSE 100 Index closed down sharply 4.1 percent or 250 points at 5,859, representing the biggest one-day percentage fall since March 2003 as fears over the impact of turmoil in the US sub-prime lending market continued to haunt investors.

Before a late in the day rally US shares fell heavily on Wall Street yesterday afternoon despite the Federal Reserve pumping an extra $17 billion into the US banking system.

But LOM Asset Management Ltd.'s vice-president and general manager Jonathan Heckscher is calling investors to sit tight and ride through this turbulent period rather than panic and sell their investments at a lower value than they could be worth.

Above all, he urges concerned parties to see their personal advisor to look at their portfolio and decide the best course of action, which may even be to take advantage of the slump in the bond and equity markets.

"My message would be for anyone to contact their personal advisor who can then look to see what is in their portfolio and have their advisor analyse where risks lie and as long as the advisor is comfortable, to take the risks," he said.

"I think there are great opportunities in the stock market and bond market to put your foot back into the water.

"I think we are in the later stages of a correction in the market, so I would be very wary of getting out of the market now because you could be getting out at the low point."

But Mr. Heckscher added a note of caution that the market is not out of the woods just yet in terms of starting to make a recovery.

"I think we are still looking at a much higher volatility for six to 10 weeks from now than we have accustomed to in the last five years," he said.

"We are going to have ups and downs, but I think we are closer to the low than seeing another 10 percent drop.

"Now we are reverting to the mean rate and the fact is that credits are out and stocks are being more volatile and I think it is important for people to realise that this is not a massive collapse like in 1987."

Central banks across the world have been taking action in a bid to restore confidence in the markets and avoid a credit squeeze, with the Fed injecting $88bn and the European Central Bank putting up 211bn euros over the past week.

And Mr Heckscher reckons this large sum of cash injection will benefit the stock market more than lowering interest rates.

"That is the first step, but in the meanwhile it is important for investors to realism and understand the underlying risks of their portfolio."

Mr. Heckscher believes the credit crunch is due to investors' sudden realisation that they are taking on more risk than they thought and demanding compensation accordingly and it is not down to the lack of liquidity or regulations of money and credit flow, while the ability of investment grade credit to meet its debt obligations has not changed dramatically either.

"Market headlines such as the sub-prime deterioration and the subsequent hedge fund scare has acted as the proverbial 'wake-up call' which has caused people to reduce their credit exposure or receive a higher yield to hold corporate bonds," he said.

"In theory this works, but in practice it has caused the market to become illiquid. The capital markets are already saturated with inventory hence do not want to add positions to their books.

"Instead, through the use of derivatives and other exotic instruments these firms have hedged their risk and hence are not lowering their prices of the bonds in their inventory.

"The result is a capital market that will not bid for or offer bonds to the market, causing the investment-grade corporate bond market to grind to a halt, making it difficult for companies to access capital and hard for investors to find a place to put their money to work.

"This is the first time in my 10 years as a manager that I have gone to the street looking for corporate bonds and have been told they have nothing to show me."