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Investment caution as investors voice stock market concerns

06 July 2009 / by Rebecca Sargent

More than half of investors do not believe the recent stock market recovery will last, research from Fool.co.uk has revealed.

The study found that while London shares have bounced back by as much as 30 per cent since the stock market lows earlier this year, 52 per cent of investors are reluctant to see this as the start of a bullish investment market.

In fact, just 24 per cent of investors believe we are approaching the next bull run for the stock market. Commenting, David Kuo, director at The Motley Fool said:

"The stock market is generally seen as a leading indicator of the economy. So, investors look forward to what is happening tomorrow rather than what is happening today or has happened yesterday."

According to Fool.co.uk, London shares have fared better than Germany and France's, but have underperformed Hong Kong, China and India's shares. This, coupled with recent Office for National Statistic figures that show a sharp 2.4 per cent contraction in the UK economy, has not done investor confidence any favours.

However, Mr Kuo adds: "The upshot is that the stock market is likely to stay at current levels, until a clearer picture of current state of the economy emerges and there is greater clarity on how countries will cope with their national debts.

"It is tempting in these situations to take on extra risk for greater returns. But a more sensible option is to keep investing regularly in the market even on the inevitable down days and to reinvest the dividends too," he advises.

"It may not put jam on the table today, but the jam will taste all the sweeter in ten year's time."

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