Published: Wednesday, 3rd February, 2010 5:00pm

Moneytimes with Jill Kerby

Personal finance columist Jill Kerby.

These are worrying times for investors, holders of pension funds, pensioners dependent on fixed incomes and for anyone else with some money that they want to preserve, let alone see grow in value, however modestly.

Over the last fortnight or so, the question on the minds of many of the commentators that I read every day is whether the stock market rally, which began in March and has resulted in up to 70% recovery of the value lost when markets crashed in late 2008, is coming to an end. (Not all markets have recovered at the same pace.)

There isn't a consensus, even among those non-mainstream media and private newsletter writers that I subscribe to, but enough of them who accurately called the original collapse, are now suggesting that stock markets seem poised for another fall, perhaps to a point even lower than was hit last March.

No one knows the future; the best analysts and advisors admit that. But their reasons for believing that the market recovery is not sustainable seem more compelling than the empty forecasting that is now going on by bank and stockbroker economists and analysts, all of whom are paid to encourage customers to spend and invest in the stock markets or in investment funds they recommend.

Their prime role is to help make their employers rich, not you.

For example, how by anyone's estimation could the 0.1% growth in the UK economy for the final quarter of 2009 be seen as the end of the 18-month UK recession? The UK's economic debt and deficit is even worse than that of the USA and its banking sector, much of which is still on life support from the UK treasury was recently downgrading by the rating agency S&P (albeit a discredited organisation too).

It is evidence like this - plus still rising unemployment figures, continuing commercial and residential foreclosures, stagnant growth earnings, low to non-existent borrowing and lending by business and consumers, the reluctance of banks to lend anyway - that is fuelling the deep pessimism of so many independent commentators whose only job is to help their customers make money through their advice.

One of their biggest ongoing worries is that so many central banks and governments still fail to recognise that adding to their budget deficits and borrowing more and more money (from the Chinese and others) is only pushing indebted countries like the US, UK, Japan and weak European countries like us, Greece, Portugal, Spain, most of the Balkans and Baltic countries, further into a debt crisis. In other words trying to cure a debt crisis caused by central banks and governments by creating more debt is sheer folly.

If you believe that governments are doing the right thing in taking on more and more debt (which we and future generations will have to pay) to support insolvent banks and other industries and individuals who borrowed and spent more money than they could afford to repay, then you must also believe that the massive, nearly unprecedented stock market rally of the past nine months or so is the genuine article and there is nothing to worry about.

If like the anti-government and central bank critics you think this rally has mainly been stimulated by government stimulus and the natural inclination for stock market traders to always buy shares after a huge fall in the full knowledge that even dead cats bounce, especially if they have a set of government springs on their poor little dead heels, you should be reviewing your portfolio and deciding whether you are happy to stay in such a volatile market. Keep in mind that most Western stock markets have produced no gains since 2000 and when adjusted for inflation, produced losses. Ditto for typical, Irish managed pension funds.

The message the experts have been repeating ever since I started writing about personal finance still holds true: buy shares cheap, sell them high. The variation on that theme is that investors will prosper if they buy the shares of companies that are well run, don't carry much debt and post steady dividends. These are the company shares that the likes of value investor Warren Buffett only purchases.

There are companies that fit the above description that are not the huge names that Buffett holds but you need to search carefully to find them. There are some high value investment funds and even low-cost ETFs that you can also buy that fit that description. Many top advisors say you shouldn't ever worry about what directions markets are going if these are the shares and funds you currently hold.

Unfortunately few people have pursued such a sensible, low-cost, low risk strategy. Most people have their money deposited and/or invested their money in shares (like Irish banks) they clearly know nothing about and in funds they can't even name.

It is those people who could lose out badly again if this bear market rally is as artificially contrived as so many independent commentators are now suggesting.

Forewarned is forearmed. At least, you should have a proper exit strategy in place if the markets do experience a sharp fall again; fortunes were lost in 2008-2009 because investors and speculators simply couldn't believe that what went up so high could fall so low.

• jillkerby.ie