Written by "The Insider"

As we move further into the 21st century, investors will look back at the 80's and 90's as orchards full of fruit. Years of cherry picking, where setbacks were seen as a buying opportunity, resulting in yet further gains for those involved with the market.

Many investment managers were seen as gurus with reputations made on the back of successful returns. In the US, people believed everyone could continue getting wealthier, with only limited risk to their capital; after all, the market only rises doesn't it? These returns fuelled spending, after all the markets would grow and replenish the endless supply of cash that continued to roll in.

We now know that this could not continue, with inflated stock prices and the technology boom of the late 90's, something had to give. The UK enjoyed a similar effect, but not quite as magnified. The property market here provided more fuel for the economy than any other area. The volatile stock markets of year 2001, have masked the bear market of 2000.

Many investment commentators share the view that the global down turn has made a return to the golden years unlikely in the near future. The days of double-digit growth are unlikely to be seen for many years. Returns will be smaller and harder to achieve. Sentiment is against the market, and investors are reluctant to commit their funds to a volatile situation. 

So, is that it then? No stock market investment for any of us, for the next decade?

There's a saying in the city, "If you can see a 'bandwagon', then you've missed it!"
Can any of you see a 'bandwagon' at the moment?

The way to make money in the market is to go against sentiment. The tide is just turning and early signs of recovery are there. It's an ideal time to buy into the markets.

Give it three to six months and the 'bandwagon' we're talking about will be rolling and every man and his dog will be trying to get into the market. The value is now, not then. This does not mean you should buy into the market in an uncontrolled fashion, or take rash decisions. Far from it, you should look for value and a sensible spread of investment. 

If you're buying Unit Trusts or ISAs, you should look at past performance figures over 1, 3, 5 and 10 years. You should look for top quartile performance in all these time periods in relation to the other funds in the sector (or theme). If there are 100 funds in the sector, then you're looking for the top 25 in all periods of time.

Many financial advisers select funds due to Star Managers. They place their faith in names, but what happens when the name moves on? Money is a great motivator and movement of managers between companies is common.

Therefore, looking for consistent returns over such a long period of time helps. It is unlikely the same fund manager will have looked after the money for the whole of the ten years.

There will be other reasons for the funds strong performance. Good long-term performance will indicate strong process and culture for selecting stocks within the fund. 

It's advisable to look at independent figures, against peer group. Moneyfacts is a highly reliable source of figures, as they are independent statistics and allow you to compare funds against each other. Individual fund management companies will publish figures that are weighted in their favour.

You should not be greedy in the amount of growth that you seek, but look for solid and steady returns. Consistency is important, as it shows the fund has read the market well over a long period of time.

Even when you find a suitable investment, you should not place all of your money into one fund. It's not unreasonable when buying an ISA for example, to divide your money between say five different funds. 

You will not be able to do this through a standard ISA manager and should approach one of the fund supermarkets. These allow you to use outside fund links and will be like pick and mix.

This will spread your investment across different manager's, "themes" and expose you to different methods of managing your money. It's far better for five 'Wallies' to manage your money, instead of one. That way, if one fund happens not to perform, the other four will hopefully provide the overall return you're looking for.

No strategy is a full proof guarantee to returns. A sensible and well thought out approach to investment can yield good returns. Just because sentiment is against the market, don't discount ISA's and Unit Trusts as an investment option. "There's hidden value in them there markets." 

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