Technology is the future for investment as the economy and market continue on their long road to recovery.

That is the view of the team from Bermuda Investment Advisory Services Ltd. (BIAS), who held their quarterly market briefing for the first quarter of 2010 at the company's offices in Par-la-Ville Road yesterday.

BIAS's CEO Robert Pires, Bryan Dooley, senior investment strategist, and Kent Turner, associate portfolio manager, told investors that the stock markets were starting to bounce back but there were still a number of challenges to watch out for.

However Mr. Turner said that businesses were looking towards making smarter use of their resources as tough economic times drives innovation in the 2010s.

He said there were a number of factors which suggested that innovation was the way forward, including companies having to upgrade their technology in order to stay competitive.

The capital is there to do it, he argued. Cash held by Standard & Poor's 500 companies over the past year rose 14 percent to $2.18 trillion.

Allied to this, Mr. Turner said, were the advance of consumer electronics, via new technology gadgets pushing sales and the advent of the smartphone revolution.

"Right now, I think the main thing we are focusing on in terms of businesses is the drive in efficiencies to save time, labour and money, while on the consumer side they have to make sure they have a product that is innovative, exciting and will want the consumer to have it," he said.

Mr. Turner said BIAS was currently overweight in the technology sector, with earnings growth forecast at 33 percent for 2010.

Companies were upgrading their technology in order to improve efficiency. The software sector proved to be the least labour intensive and offered wide profit margins of between 25 to 30 percent. Global chip maker Intel a prime example of such a top tech firm.

Internet marketing was another key part of the move to technology, commanding a larger share of advertising budgets to tap into a target market of consumers who spent 36 percent of their viewing time online.

Other benefits, according to Mr. Turner, were relatively low cost per view, while the ability to track and profile customers was another advantage, as reflected in Yahoo, eBay, Amazon and Adobe, to name but a few companies. On the retail front, he said, Best Buy proved the case in point for businesses which were large in size, but nimble in strategy as reflected in its 34 percent rise in Internet sales during the last quarter.

Although companies were seeing an improvement in their bottom lines, the recovery was not yielding many jobs and with a lot of US treasury debts set to mature in 2010, the US Government needed to raise almost $2 trillion. Mr. Dooley then gave a presentation on the global and US economic situation, highlighting a 63 percent increase in the FTSE All-World Stock Index since March 2009 as cause for optimism. On the flipside he flagged up central banks withdrawing their stimulus packages and the crowding out of credit markets to stubbornly high unemployment.