THE LAST time I remember a summer as warm as this was 1976. Then the market was still in recovery mode after the savage bear market of 1974. Nearly 25 years later the index is considerably higher, but the market is looking more than a little tired. Could this be the time to sell? It might be if you hold indexed funds, but there is still plenty of interest around individual shares. Stock pickers should hang on in.

One of the more encouraging aspects of the market is that there is less talk of a major correction. In part this is because share prices on both sides of the Atlantic have drifted back from their peaks by an appreciable percentage. Despite this, most of the economic signs are encouraging.

The runaway pace of economic growth in the US appears to be slowing, while here revised statistics suggest that earlier this year we experienced the recession that never was. Indeed, the results season is suggesting that, with a few notable exceptions, British companies are not having too bad a time of it. The near 10 per cent pull back in the market that has taken place may be attributed to conditions that exist despite the recent results season, not because of it.

But if the index of Britain's leading companies is suffering the summer doldrums, not all of the market is in reverse. Investment trusts and smaller company shares have enjoyed a good 1999. You could say that this is because they have underperformed in previous years - and that is precisely where this market is beginning to look very interesting.

There is still a positive flow of funds awaiting investment, so if leading companies are not to be bought, the money has to be directed somewhere. Cash is simply not providing the return that used to be the case, so there has been a lot of value hunting by professional money managers. This is a game that private investors could well profit at.

That there is an appetite for interesting investment situations from private investors was made clear by the over-subscription for Freeserve, a company that could hardly be valued using any historic criteria. Yet private investor support alone has not been enough to keep the interest in smaller companies alive.

There seems little doubt that the relative outperformance we have seen this year has been caused by institutional buying by big insurance companies and pension funds - rather than by Sid piling in. In fact, private investors are a declining force in the stockmarket.

It seems likely that fewer than one in six shares is now in private hands. No wonder markets are so volatile. To try to redress this clear imbalance, I shall be trawling around smaller company and investment trust shares in the next few weeks to come up with an idea or two. I hope you take my advice. A recent survey found that private investors are two and a half times more likely to follow advice in a newspaper column than from a financial adviser.

Brian Tora is chairman of the Greig Middleton investment strategy committee