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INVESTMENT VIEW

There was plenty to get your teeth into last week – not all of it good. The Dow Jones index flirted with 11,000 (good) but the FTSE 100 continued in the doldrums (bad). The monetary policy committee cut interest rates (good) while BT demonstrated just how much debt they had managed to acquire (bad). And Orange was forced to cut the price of its IPO (good for some, bad for others).

It is the lack of direction in the domestic market that is most worrying. We are moving into the peak selling season for Isas and it is beginning to look like a rerun of the 401(k) scenario in America. There, despite expectations of a yearend/early January market bonanza, investors stayed away in droves. Perhaps they did top up their pension funds but the money went nowhere near the equity market. There are just a few signs, though, that it might be dribbling in now.

America tends to be ahead of us in a variety of ways. They are already well into their year-end reporting season and the last quarter of 2000 looks to be every bit as bad as everyone expected. In particular, technology companies are taking the full brunt of the American economic slowdown.

Even Cisco hit the buffers, predicting that sales could even fall in the first quarter of this year. Yet most investors seem to be treating current earnings statements as history. There is considerable confidence that a full one percentage point cut in interest rates in America will be enough to kickstart the economy, if not in the first quarter of the current year, then at least by the summer. How strange, therefore, that in the UK, where recent consumer confidence figures were still pointing upwards and even manufacturing output increased for January, investors are fighting shy of committing their funds to the market.

In part, this can be laid at the door of the poor performance of the telecoms sector. Telecoms are an important part of the FTSE 100 index and the indifferent performance they have been delivering will have made its impact. What this does go to show is the extent to which sentiment governs market performance. Not all the news coming out of the telecoms sector is negative. Perhaps providers of mobile communications are approaching saturation point, most notably in Europe.

In the meantime, the role of the poor investment manager becomes ever more difficult. Duck out of trying to pick individual shares – or even sectors that will deliver you outperformance – and you will have found that index tracking will have done you no favours for 18 months or so. Yet who might have predicted that a timely switch out of technology into banks at about this time last year would have paid handsomely? Perhaps the move towards more esoteric investments is inevitable.

With that in mind, I joined more people than I realised were interested in tax-efficient investments at Close Brothers&#39 Christmas party at the RAC Club at the middle of last week. Yes, I did say Christmas party. But then, if you are into such esoteric investment areas as venture capital trusts and enterprise investment schemes – not to mention single property investments – then holding your Christmas party at the beginning of February must have appeared almost normal.

I came away itching to add a signature to my chequebook for a piece of commercial London or a slug of a retirement home portfolio.

I am well aware of the other investment options available. If my immediate gut feeling is not an indication that more conventional means of making money are now looking tired, I do not know what is. Then again, it could prove the buy signal for equities of all time.

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