At the risk of sounding repetitive, there seems to be very limited upside potential for the stock markets of the industrialised countries over a three to five years time horizon from end-2009 levels. This may seem surprising after a decade of stagnation on the markets: however, it is the result of the extreme overvaluation of equities at the end of the 1990s.

This time last year, I wrote that the New Year tradition of making forecasts for the year to come was an even more perilous exercise than usual. My reasons at the time were linked to the lack of visibility on the economic situation and the uncertainty on the banking landscape.

The inconsistencies that were predicted by many economists when the euro was introduced, but were masked by the favourable economic situation between 2000 and 2008, have now come to light with the problems in Greece.

In the following, I try to answer some of the main questions people have posted on the blog in the past few months.

Below, I offer some answers to five questions that have been frequently put to me.

You might be surprised at my reticence to believe in a sustainable improvement in the economic situation when every day the media seem to be presenting us with encouraging economic statistics. So here is a brief summary of my reasons.

We have taken advantage of the rise in stock markets over the last 2 months to reduce the equity allocation in the BL-Global Flexible fund even further.

The rise in long-term interest rates has been used to increase the weighting of bonds in the portfolio to 47%.

In my article on 7 April (Bear market rally), I argued that the 20% or so rise on the markets between the beginning of March and the beginning of April represented a technical rebound in a bear market and not the start of a new bull market. Since the article was published, share prices have continued to rise, so it seems like a good idea to take another look at the arguments on which that conclusion was based.

The stock markets have staged an impressive rebound over the past few weeks. In February and early March, stock prices slumped on fears about the economy and the poor response to the US government's stability plan for the financial system.