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Investment view

Last week saw yet another record that we would rather not have seen. The UK market recorded falls on nine consecutive days. This was a unique event in the life of the FTSE 100. Even eight days is rare, although we had eight down days on the trot as recently as last December. The bear market is clearly refusing to lie down.

This is like death by 1,000 cuts. An inexorable slide fuelled by the continuing rebasing of portfolios to reflect market conditions, the withdrawal of money from the equity market as individual investors lose patience and a sheer absence of buyers. And there is one other ingredient that is missing to stimulate market recovery – good news.

Not all the news is bad. We have seen some fairly optimistic comments accompanying final-quarter figures from US companies. But the threat of war overhangs the market and the only bit of good news this market wants to hear is the removal of the uncertainty this creates.

It was interesting to hear Alistair Ross Goobey opine on the radio that nine days of market declines are unimportant. Of much more concern is the 10 per cent that has been wiped off the value of shares during two weeks. This will be intensifying the pressure on insurance companies and pension funds. It brings shares down to a seven-year low. The UK market stands at little more than half its value at its peak, yet valuation levels are not significantly cheap, even if they do not look too demanding either. These are difficult times.

The City is, of course, lightened by the spectacle of merchant bankers rushing around to bid for the hottest company in town – Safeway. Who would have thought so much interest could have been stirred up over one little supermarket group?

One other deal caught my eye last week. Collins Stewart, the stockbroking firm run by Terry Smith, is spending more than £200m on buying Tullett and Tokyo, a private company that has grown to become one of the world&#39s biggest inter-dealer brokers. This gives Collins Stewart exposure to the fixed-interest market and thus a degree of diversification.

It is an indication that “King Equity” is, at the very least, having to share his throne. Anyone who has taken out Isas every year since they were first launched will probably have lost the equivalent of a full year&#39s contributions through declining share prices. It is doubtful that anyone building a long-term savings portfolio will trust to a single asset class in quite the way that we did during the 1980s and the 1990s.

The fact that we are almost certainly much closer to the end of this particular bear market than to its beginning is merely incidental. Any final sell-off, when it comes, could be painful. Maybe the market is telling us that the really difficult times in the economy and business still lie ahead.

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