'When you think about it, nothing has really changed at all'

You cannot turn your back on this market for an instant. Before leaving for holiday in September, the market had all the signs of developing an autumn rally. After but a week or two away, I return to find the FTSE 100 Index close to the bottom of its recent trading range, with little cheer on the other side of the Atlantic. The question is, will markets regain their poise or should we expect this year to deliver negative returns overall?

You cannot turn your back on this market for an instant. Before leaving for holiday in September, the market had all the signs of developing an autumn rally. After but a week or two away, I return to find the FTSE 100 Index close to the bottom of its recent trading range, with little cheer on the other side of the Atlantic. The question is, will markets regain their poise or should we expect this year to deliver negative returns overall?

In America there have been a larger number than usual of profits warnings issued by leading companies. The technology sector has been a particular feature. Dell, the computer manufacturer, was among those dampening investors' expectations.

We seem to be doing rather better in this country. A recent report of the 447 UK companies that have published profit figures since the beginning of the year shows 55 per cent have beaten the consensus forecasts, but it has not helped our market buck the trend set on the other side of the Atlantic. Continued gyrations among technology shares certainly do not help. When compared with its peers, the UK has returned a disappointing performance. The US, as always, holds the key.

Consumer demand in America seems to be slowing, but signs that economic growth remains remarkably robust still abound. Unemployment is at a 30-year low. It may be good news, but it is hardly likely to encourage the Federal Reserve Bank to cut interest rates. We still need a buoyant America if the rest of the world is to maintain economic growth. There is some speculation that a hard landing is now possible.

Some commentators believe we may be coming to the end of one of the longest bull markets in history. Certainly, equity investment appears to have come of age. But it will take a lot of additional savings to keep markets running at the rate we have enjoyed since the early 1980s. Perhaps we have experienced a re-rating of ordinary shares, brought about by the growth of personal investment, which is now drawing to a close. If that is the case, we should be preparing ourselves for less spectacular returns in the years ahead.

Of itself this is not a reason for pessimism. If we really are living in an age of low inflation and continuing productivity growth, then stock market returns superior to those achievable from either bond markets or cash continue to be likely over the longer term. But while it might be right to put your faith in the stock market, it will become increasingly important to realise the double-digit returns of the past may no longer be with us.

We approach the anniversary of the 1987 stock market crash with more than a little trepidation. The oil price remains a problem, while international conflict can destabilise markets. When you think about it, nothing has really changed at all. It is just that we have had a dose of realism in recent weeks which, in the long run, will do none of us any harm. It may also have provided a buying opportunity for those who, like me, still subscribe to the cult of the equity.

Brian Tora is Chairman of the Greig Middleton Asset Allocation Committee