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Most investors become so worried by the overall state of the market that they lose sight of the relative pricing of

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Most investors become so worried by the overall state of the market that they lose sight of the relative pricing of individual securities. Looking through the list of best-performing shares over the past three months, and comparing it to the shares that have done best over the past 12 months, it is striking that there is almost no overlap between the two groups.The first list is dominated by Vodafone and a string of former growth stocks that have suffered badly in the bear markets, but which have now shown some renewed signs of life. The year's best performers are still led by tobacco shares, utilities and other defensive stocks.What this says to me is that investors are looking for signs of a renewed bull market, but nobody is yet paying much attention to intrinsic value. This is certainly an environment in which stockpicking should flourish, given time. It is also consistent with the idea that the stock market is again offering some value, albeit on a selective basis. It is not yet time to revert to a strategy of buy and hold, but it may not be long.Davisbiz aol .

It can be a strange experience, going back over what one has written before. A year ago in this space I was able to write: "With the FTSE hovering nastily around 5,000 it looks as if the recent mini-rally is petering out." I could have written much the same now, substituting 4,000 for 5,000 , of course. Perhaps next year it will be a case of "with the FTSE hovering around 3,000 etc". An awful lot of shares are still below the levels they were at last Christmas, though some have staged a remarkable mini-rally since the summer. Vodafone, quite a chunk of the market on its own, is a case in point. This time last year it was trading at about 180p, somewhat off its highs, and I was still buying at that level.

By the summer it had collapsed to 80p, and again I carried on buying. Now it has moved up to about 115p to 120p, and I have some profits to show on the last few tranches I bought But I'm still under water. As I have often said, you ought to be in equities for the long run, but in the short run we could be in for crunchy times. I know that it's bad form to quote yourself so much, but again I cannot resist the temptation. This time last last December I wrote: "Private consumer debt is becoming as big a potential problem as it became in the boom engineered by Nigel Lawson when he was Chancellor in the Eighties. Anyone who is taking on a bigger mortgage should ask themselves what would happen to their monthly repayments if interest rates doubled."If more of us has wondered about that in 1988 or 1989 we might not have had that lingering hangover through the early Nineties. Have a good party."Maybe I was a wrong about interest rates doubling, but the next movement might well be upwards if the hawkish noises coming from the Bank of England are anything to go by.

I've said it before and I'll say it again, that the household debt burden is about as high as it has ever been and the prospect of very low inflation means there is little chance of it being eroded in real terms. To use a word that seems to have gone out of fashion recently, it is prudent to cut debt as quickly as possible now before one may have to do so by force of circumstance. Not a very cheery message, I know, but from the housing market to the overseas trade deficit things do have a very 1989-end-of-the-party feel about them. Which is not to say that shares have lost all their attractions. Twelve months ago (I hope this isn't getting too repetitive) I managed to highlight smaller companies I had had mixed success with, and which I still hold.

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