Private Investor: When in doubt, duck and pass on the new Russian revolution

An unladylike expletive nearly passed my lips when I saw the story: "About 320 Russian companies may soon be listed on the London Stock Exchange to attract foreign capital." Not mine, was my reflex. And neither are Russians very keen to invest in their own companies.

All the signs are that the share recovery over the past year has lowered investors' risk thresholds. But the Russian tale smacked of the sort of wild market that signals the very top of a bull phase. So then I worried that perhaps that kind of extravagance, evocative of the rush to float those hundreds of dot-coms, meant it was all over for now as far as the market was concerned. Pity; there were so many ideas I had not acted on.

A little research calmed me down. The story about the Russian listings came from Russia. Behind it was a marketing foray by London's Alternative Investment Market (AIM), presumably seeking fees for the London-based lawyers and brokers who would handle such a bonanza.

AIM has its sights on those Russian resources, and the mining companies. Last year 15 of the 60 companies coming to AIM were miners rushing to capitalise on reviving interest in gold. Prices of several, such as Peter Hambro Mining and Highland Gold, have since soared.

But the attraction of a market quote is not UK investors' cash, according to Mark Bankes, a partner at the lawyers Norton Rose, reported in the trade paper The Lawyer. Instead it is credibility gained for banking negotiations and shares for deals. Mr Bankes added that most of these new companies also want a base for mergers. Of course, some will be gobbled up by bigger players. "It creates a nice natural life- cycle and a good cycle of work for lawyers," he said.

Quite! An ordinary investor has got to keep on the ball for what is behind stories. Just because London is a legal gold mine, that does not mean an influx of Russian corporates is going to be good for me. Perhaps it is good for the billions of expatriated Russian roubles wanting to invest back home through a corporate governance wrap and the safety of an offshore account.

Here is another wall of money that a mere private investor can only read about and not track, like the vast global hedge fund industry. Last week even a possible $10 a barrel fall in the price of oil, to a more comfortable $25 level, was being predicated by the Saudis on hedge funds unwinding their positions as the warm weather arrived.

So back to assessing risk and what seems right for my share portfolio. Barometers I can read, such as steady bond market prices, indicate no retreat from UK equities even though new solvency rules pushed Standard Life into dumping £7.5bn of shares.

In fact, rising new issue numbers and deals, and shrinking investment trust discounts, show funds to be willing buyers. The main UK equity market is on a prospective PE ratio of 14, in line with its long-term average, according to the broker Charles Stanley. The relationship between equities and long-term gilts is below its long-term average, suggesting that shares are good value.

The questions remain: will house prices prove a bubble, what damage will be done by the 50-year high in the sterling-dollar exchange rate, and how durable is UK growth?

When in doubt, duck, seems a good maxim here. The issues are too big. My solution has been at micro-level, stock-picking guided by non-Russian stories from the just completed year-end financial results season.

The hedge fund manager Man Group looks a must, given its booming speciality, on the basis that if you can't beat them ... It has just raised £443m with a fund enabling investors to go for five different strategies. It trades on just 15 times 2005 prospective earnings after defying scepticism that this was the management style of the future, its price doubling in the last year.

Random research, among the journalist's staple of receptionists, taxi-drivers, etc, backs housebuilders' insistence that demand is still there. Risking buying them has stood me in good stead. Ratings remain cheap, and Countryside and Persimmon still look stars. Smaller, but quality, Bellway could be a take-over candidate.

Terrorism-driven travel disruption has brought me one newcomer. The US is blocking Arab health tourists, and their medical samples. So Medical Solutions is using its tele-pathology, sending tests images to US laboratories from its Middle East clinics. Looks like good long-term business.

Sean O'Grady is away