Interest rates have come down while the FTSE index has just gone South

LAST WEEK saw me take my first trip to Austria. The object was to learn to ski - also a first. The good news is that I returned in one piece.

The even better news is that I had no trouble in dealing with the Austrian currency. There are 20 Austrian schillings to the pound. I seem to recall that, until 28 years ago, the same measure applied to our own currency. Interestingly one of my travelling companions told me that 20 schillings has been the exchange rate for a considerable length of time. There has to be a moral there somewhere.

Travelling around the ski resorts of southern Austria I was struck by the fact that only one restaurant I came across offered the option for settling the bill in euros.

Since no establishment appeared to accept credit cards, I have not had the chance to discover the effect of being billed in the new European currency for services purchased in the EU. Still, it was an interesting venture into an alternative culture and one which at my age and build is unlikely to be repeated in a hurry.

It was amazing how much had changed during the brief period I was away. The Bank of England's Monetary Policy Committee lowered interest rates by 50 basis points, while the FTSE index seemed to do nothing but go South. It is only in the last day or so that share prices here in the UK have steadied.

We seem to have a classic conflict here and in the US between the weight of money seeking investment opportunities, and the increasing nervousness of professional managers over the valuation levels accorded to equities.

Take the shake-out in Wall Street at the beginning of the week. The Dow Jones Industrial Average fell by a little over 1 per cent, but Nasdaq was nearly 4 per cent down. Much of this was due to a sudden disenchantment with Internet stocks, virtually all of which are quoted on this exchange. In a way I find this encouraging.

Not so long ago I read of an Internet company bought by one of the established American high-tech houses for nearly a quarter of a billion dollars. This firm, formed by a small group of young Israeli rocket scientists, had no revenues, no profits - simply ideas. But they were worth a lot of money. Perhaps their aspirations will be translated into revenues in due course. But there are some crazy valuations out there.

Meantime, we have seen a gentle reassessment of some value areas in investment, most notably smaller company stocks where the opportunities and dividend yields, now considerably higher than those achievable on gilts, are at last attracting investors.

Many of these smaller businesses are in manufacturing and sell abroad. I rather think it is more the desperation of money seeking a home at a time when gilt yields are rock bottom, multi-national companies are close to all time highs and there seems little to buy.

Ski stocks are out of the question, but I shall now spend some time trawling the market to see what might have been overlooked.

Brian Tora is head of the asset management division of Greig Middleton