At the end of trading on Monday 2nd March, the Dow Jones Industrial Average closed at 6,763 breaking down below the 7,000 mark. This is the lowest close on the index since April 1997. It also marks a reduction of 50% in the index value from October 2007. This breakdown below a support level of 7,200 focuses our mind.

In this investment update I would like to provide you with our outlook on the markets and how we can deal with the market volatility. There is no doubt investors are facing some of the most difficult investment conditions for the past 50 years. The partial collapse of the banking system and continual outpouring of poor economic news has caused markets to go into a tail spin. Whilst markets usually overreact in good and bad times, the events taking place cannot be ignored.

With this background we have to retain some prospective and make decisions on the facts that are to hand. Although portfolios have seen reductions it is interesting to note the use of collective investments have in many cases sheltered clients from the full effect of market reductions. A good example is the Jupiter Merlin Growth Portfolio (a favorite of ours) which, whilst falling 18% over the past 12 months, has outperformed the FTSE 100 index which has fallen closer to 35% over the same period.

There seems to be a battle between technical analysis and psychological factors. The technical analysis shows the markets are extremely oversold and we would expect a significant rally during 2009. On the other hand, the psychological effect of the continual selling on the main markets has left investors exhausted. This is not a collapse of markets over a short period but a drip drip approach.

At these times it is important to focus on the fundamentals of financial and investment planning. Diversification of assets becomes critical. For investors who have a well diversified portfolio and sufficient weighting in cash, they are able to accept further reductions in the market and can take a longer term view for market recovery. Alternatively, if your financial position is such that any further deterioration in fund values could severely impact your financial and lifestyle objectives, then a review of the current situation becomes essential.

Landmark's view is that we shall see a rebound in equity markets at some point during 2009. We do not believe the increases from the current level will retest the highs of October 2007 but any increase in markets should allow investors to reassess their position and their weightings in the major asset classes.

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