If you sold in May and went away...

...you'd have been as sick as a parrot by St Ledger's Day.

When Classic Cliche romped home to win the St Ledger last Saturday, at the ungenerous odds of 100 to 30, the average punter will have been lucky to make more than a modest return.

But any return, however small, is better than nothing at all. And that would certainly have been the reward for misguided investors who still cling to that other classic cliche: "sell in May, go away and don't come back until St Ledger's day''.

The old stock market adage - a throwback to Victorian times when stockbroking clients would close their London houses and shoot off to the country for the season - has rarely stood investors in good stead recently. This year it would have proved positively disastrous as shares hit an all-time high, fuelled by takeover fever, a resurgent US dollar, an ebullient Wall Street and the increasing belief that the next move in UK interest rates will be down.

If you had sold your shares on 2 May you would have bowed out with the FTSE 100-share index of leading company shares at 3,216.7 and the 350 index at 1,598.4. By Friday, 8 September, the day before the St Ledger, those indices had closed at 3,554.5 and 1,774.2, a thumping rise of 10.5 and 11 per cent respectively.

If you had gone away in May you would have also missed a raft of announcements and rule changes that have reshaped the investment landscape. These include the introduction of fixed-interest personal equity plans, the start of the alternative investment market, changes to the taxation of gilts and the move to a five-day rolling settlement for share transactions.

But the good news for those that missed out is that there is probably life in the old bull yet. While the grizzlies argue that rising government borrowing will undermine the rally in government bonds (putting paid to equities in the process), the consensus among City stockbrokers is that the market is only half-way through a bull run. The FTSE 100-share index hit fresh records again this week, buoyed by renewed confidence in the world inflation outlook. Some brokers are now talking of 4,000 by next spring.

True, the interim results season has confirmed a slowdown in corporate profits growth. But advocates of the "wall of money" theory argue there is too much spare cash looking for a home for the share rally to stall yet. The shake-up among the privatised utilities, pharmaceuticals and banks is not over.

The most significant change for the private investor this summer was undoubtedly the extension of the Pep rules to allow tax breaks on corporate bonds, preference shares and convertibles. Provided care is taken to choose quality funds that do not charge through the nose, investors can now generate a good income while keeping their capital relatively secure.

Investment opportunities certainly exist on the new alternative investment market, which allows growing companies to raise capital at a reduced cost. AIM now lists 33 companies and is popular with syndicates such as investment clubs. The abolition this month of the London Stock Exchange's 4.2 rule - an occasional dealing facility for some 350 small family-controlled companies - could swell the ranks considerably. STOCKBROKERS SAY... DO Take profits and buy selectively. Consider consumer stocks such as Marks & Spencer (Argos if you want something cheaper). The retail sector has been significantly depressed. DON'T Chase the regional electricity companies looking for the next bid. If you already own REC shares stay with them. If you own Sweb or Eastern Electricity shares, accept the offer.