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Julian Gibbs

Most world stockmarkets are still a long way off their peaks. The Japanese Nikkei 225 is over 70 per cent off, the Nasdaq is over 60 per cent off, the FTSE Ebloc 300 and German Dax are 50 per cent off while most other markets are between 30 and 50 per cent off their previous highs.

With the US economy and most other world economies beginning to recover, it is a sensible time to speculate to accumulate. By this, I mean investing in well run unit trusts where the managers can buy and sell without having to take capital gains tax into account.

The Far East is my favourite area at present. I still believe there is a long way to go in this market and the trusts I like here are New Star (ex-Exeter) Pacific growth, Hugh Young&#39s Aberdeen Asia Pacific, Angus Tulloch&#39s First State Asia Pacific and Stuart Parks&#39 Invesco Perpetual Pacific, which also invests in Japan.

There have been many false dawns in Japan but, as in all markets, there are times when stocks become much undervalued. While the Japanese market has been horrific over the last 15 years, there have been some years, such as 1999 and 2000, when shares have risen dramatically. For example, First State Japanese rose by 157 per cent in 1999 with a further 10 per cent in 2000 and Baillie Gifford Japanese smaller companies rose by 139 per cent in 1999 with a further 17 per cent in 2000.

Friends Provident Japanese smaller companies is also a good bet and, for those who want a bigger companies&#39 fund, Denis Clough&#39s Schroder Tokyo has consistently proved to be an above-average performer.

A spread of investments in a selection of these funds should prove highly profitable in two o three years but monitor the funds if they rise too fast.

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