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Investment view

There have been some very interesting and contrasting scenes to be viewed from the windows of my office over recent weeks. One of the two office blocks immediately adjacent to our London headquarters is being demolished. The other site is now at the heart of a frenzy of activity as the building that was cleared away earlier during the year is re-erected to house – according to the advertising hoarding outside – a prestigious London headquarters. The City may be experiencing tough times but there is plenty of work for the construction industry even now.

Property has, of course, enjoyed a more buoyant period of late. It is small wonder when financial markets have proved such a tricky place in which to operate. But even here we are seeing some signs of strain. Commercial property remains steady but the buy-to-let market appears to be bubbling over as the supply of properties exceeds the availability of tenants. Meanwhile, estate agents around the country are suggesting that the breakneck run in property values is now demonstrably slowing. Where are we to put our money in these difficult times if property is turning against us?

The actual rise in residential property values is rather difficult to compute. There are now a whole wealth of surveys available and they do not all tell the same story. Lenders Nationwide and Halifax tend to paint a similar picture, recording a 20 per cent plus rise since the beginning of last year.

Then there is the Land Registry, which is a little more subdued in its estimate of how much property has risen. Hometrack and Right Move produce surveys and now the office of the Deputy Prime Minister also gets in on the act. These last three sources suggest the rise has been not much above half that shown by the mortgage lenders.

So much for property – what about shares? We have reached the first anniversary of the terrorists&#39 attacks on North America. The past year has been nothing if not testing for investors. The sell-off which those terrible events triggered was sharp but mercifully short. By September 21 (which coincidentally happened to be my birthday and consequently a day I am unlikely to forget), the immediate post-attack lows had been reached and markets with one accord turned north again. But if we thought we were out of the woods, we had another think coming.

The rebound was steady and relatively convincing, with our own market peaking in the early days of December. American markets maintained their momentum for longer, with both the S&P 500 and the Nasdaq indices reaching highs in the first few days of 2002. The Dow Jones Industrial Average, which as I constantly remind people is far from representative of the market as a whole, kept going for even longer, peaking at over 10,600 on March 19. But no further progress was made.

The falls that took place during the early summer gathered momentum as June turned into July and we had seen 30 per cent wiped off the FTSE100 index and not far short of that from American markets by mid-July. August turned out to be an all together more robust month but even that faded as September approached.

Uncertainty has persisted in the background and it is still clear that private investors are fighting shy of committing money to the market. It is difficult to see what may bring their confidence back.

Now, as we look at the world a year on from September 11, 2001, we realise that many problems still remain. The trouble is that a lot of them are rather different than we envisaged at the beginning of the year when many of us thought that the worst was behind us.

Excess capacity is proving difficult to eliminate, particularly in the technology sector. The outcome of the war against terror is far from certain and few can really be sure as to how Britain&#39s pension fund industry is likely to look in the months and years ahead.

Still, they say it is always darkest before dawn, so I am hoping we will have good news in the weeks and months ahead. Governments are dependent upon healthy markets, so it is hard to imagine them not continuing to stimulate them if economic activity remains subdued. Who knows, we may even find inflation returning. In limited quantities, it will do us little harm. Get out there and buy. It is your duty.

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