Share prices on the London stock market reached new highs this week as investors celebrated a three-month rally from the low point of 3287 which the FTSE 100 index plumbed on 12 March, taking the index nearly 1,000 points higher at one stage.
It may be too early to perform the last rites over the still-twitching bear market, but there has undoubtedly been a change in sentiment over the past few weeks. Confidence has revived, prompting fund managers to tiptoe back into the equity market on behalf of their customers. Forced selling by insurance companies has dried up, and there has been some switching from bonds amid fears that they are looking dangerously high.
I trust that readers of The Independent have enjoyed the fruits of the Baghdad Bounce. On 13 March, our Business and City Editor, Jeremy Warner, said: "The stock market has become a raging long-term buy. British and the US share prices are now so far out of kilter with government bonds that something truly calamitous has to happen to justify the anomaly."
Although I have been more bearish, I have consistently recommended regularly drip-feeding money into shares, to capitalise on low prices.
My prediction that the FTSE 100 would go below 3000 now looks more remote, barring another disaster similar to 11 September, 2001. But the main fear after that day's attacks was that we were embarking on a terrorist war that could destabilise Europe and the US with a series of such raids. It is now clear that, while al-Qa'ida or its supporters will arrange further atrocities, they lack the capacity to mount frequent attacks that will send a US President scurrying to his bunker month after month.
Plenty of worries remain on the economic front, from deflation to the impact of a cheap dollar on non-US exporters. Those factors will restrain the equity market from the effects of over-optimism. The important point now is not whether we are in a new bull market, but whether a sufficiently firm floor has been placed under share prices to permit fresh buying.
There may yet be one more leg to the bear market, testing the previous low point, but it is becoming less likely. I repeat, the best tactic is to make regular monthly forays into the market.
* Con artists and debt rip-off merchants have had an uneasy week at the hands of the Government. An Office of Fair Trading investigation into debt consolidators has been followed by a declaration that a clause in the forthcoming Gambling Bill will attempt to outlaw so-called pyramid schemes.
Separately, the entirely legitimate Provident Financial, a leading doorstep lender, was attacked in a report accusing it of unethical behaviour over its high rates of interest.
But the Consumer Credit Counselling Service supports Friends Providential's claim that it provides a labour-intensive service to those who cannot otherwise obtain loans, saving them from loan-sharks.
The debt consolidators, a mainstay of daytime television advertising, face the more serious charge that they delude customers into believing that, by bringing all their debts under one roof and reducing the monthly payments, they are saving money. The catch is that repayments are often stretched over a longer period, increasing the total cost of the loan.
But even this gloss pales into insignificance against the con perpetrated by organisers of pyramid schemes such as Hearts and Women Empowering Women. They pretend to create wealth, when they are merely inducing participants to make gifts in the hope that they, in turn, will receive gifts. Such schemes naturally have a finite life, leaving those at the end of the queue empty-handed.
The Government hopes to outlaw gifts, but we shall see whether this is enough. The new law will not come into force for two years, which may prompt a rush to launch schemes before the shutters come down.
But, for all this activity, the loan-sharks can still sleep easy. The terrible paradox of making it harder to lend, and therefore to borrow, is that more people could be driven into the teeth of the sharks. And that can be stopped only with more community policing and free, accessible, friendly advice.
William Kay is Personal Finance Editor of 'The Independent'Reuse content