This is so precisely the opposite of the bullish belief in the summer of 1987 that the low- inflation boom was going to last for ever that it may again signal a major turning point in share prices - only this time from bear to bull market.
There are other positive pointers. Dividend yields on the major indices are over 5 per cent, which in the past has invariably meant that shares are cheap.
True, they have sometimes become cheaper still before going up, but never when inflation has been around 4 per cent and falling. Also, the ratio of gilt yields to equity yields, at around 1.8, is the lowest since the apocalyptic equity market low of 1974.
On a shorter-term view shares have been depressed by a steady stream of profit downgrades. Over recent weeks at stockbroker BZW, for example, 80 per cent of changed forecasts have been downwards, affecting a hundred medium or large companies. The last time that happened was in the autumn of 1990, when shares were in the final stages of decline before staging a rocket-like advance.
Some observers would say that many of the conditions are in place for a major revival in share markets worldwide. Inflation is at low levels and falling nearly everywhere. Bond markets are correspondingly strong, which has traditionally been an early sign of rising equity markets.
Lastly, there is the operational gearing argument. The huge rise in unemployment during the recession is the visible evidence of dramatic productivity gains. When demand recovers on this sharply reduced cost base, profits will soar.
It is time to be aggressive and take a view. This is especially the case because at some point UK interest rates are going to plunge. When that happens there will be a rush for solid, high-yielding shares.
The 10 shares listed below are leading companies offering dividend yields over 7 per cent. The average of 7.4 per cent is nearly 50 per cent ahead of the yield on the FT All-Share index, and not too far from the return available on long-dated gilts.
There is an excellent chance that none of these 10 companies will cut their dividends, and that they will rise substantially on a medium-term view. National Westminster, for example, like most banks, is suffering from bad-debt problems, but behind the scenes it is cutting costs and raising productivity to such effect that operating profits, before bad debt write-offs, are running at record levels.
The 10 selected companies, whose shares are selling at bargain-basement levels, are: BET, the business services group, at 110p; building materials companies Blue Circle and Redland, at 187p and 463p respectively; British Gas at 240p; Hanson, the transatlantic conglomerate, 204p; Land Securities, 376p; NatWest, 318p; Rank Organisation, 575p; Sun Alliance, 251p; and GKN, the motor components group, 389p.
Buyers should remember that the above-average yields reflect above-average risks.
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