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Investment view

Oh woe, woe and thrice woe. Last week was one that I would really rather forget in stockmarket terms. Gateway laid off a quarter of its workforce. Spirent announced better than expected first-half profits but said it hasn&#39t a clue as to what would happen in the second half. Sun Microsystems added to the dismay generated in the technology sector. And as if that was not enough, the Japanese stockmarket hit a 17-year low. They say it is always darkest before dawn but I have never felt more as if I need the sight of the sun peeping over the horizon.

It is, I have to say, not all gloom and doom. Some of the results published recently have not been at all bad. Old economy stocks such as Reckitt Benchiser and Hilton came out with results that were ahead of expectations and showed that whatever slowing we are seeing in the economy, it is by no means across the board. Still, with gurus as eminent as Warren Buffett postulating that this slowdown might last as long as eight years, you have to accept that times are just that little bit tough for the investing community.

My view has been, and remains, that this bear market will come to an end and that prices will resume an upward course at some stage. It is hard to say when the bottom will be reached. Nobody rings a bell but for all I know we may already have seen the turn. Unfortunately, you only have to look at Japan to realise that bear markets can last for a considerable length of time and be savage in their scale.

Japan is, though, a special case. At a time when the markets set the agenda, the Japanese government has chosen to maintain a path of artificiality which may not even end with the appointment of Koizumi. It is known that not everyone in the Japanese establishment favours his wide-ranging reforms. In the meantime, the state of the Japanese economy looks horrid. With the Tokyo index plummeting towards a quarter of its value little more than a decade ago, it is hard to get too enthused about putting money back into the second biggest economy in the world.

It must be very difficult when you are dealing with clients to know what to suggest for the best. Those who rode the technology wave appear, by and large, to have lost any pragmatism that they may have possessed. I have been talking to enough private investors to realise that they have been shocked and saddened by the pullback in new economy stocks over the past 18 months, even if they were fortunate enough to make considerable sums of money when the world went mad and technology was king.

Hindsight is a wonderful thing in this business. No one knows for certain what is likely to happen, yet it is so easy after the event to realise what you should have done. The same can be said of the turn in the market. We will only know it has taken place well after the event.

Europe, too, has not been making fortunes for its followers. At least the European Central Bank has had the good sense to cut interest rates. It took a while for the reality to sink in that snuffles in America would take more than a handkerchief to wipe away in Euroland. The deed is done. It should do no harm to the euro and might bring some much needed relief to equity markets.

Of course, everything that is happening at the moment takes place against a background of very thin volumes. One day last week, Vodafone and Woolworth between them accounted for more than one-third of all the turnover on the London stockmarket. It is not just that professional traders are on holiday. The private investor seems to have all but withdrawn from this market. It may take a little while before they return in droves.

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