WALL Street legend and presidential advisor Bernard Baruch made his fortune through market timing, ignoring the herd mentality, using the maxim of speculate to accumulate.

One of his best one-liners in response to accusations of luck was “a speculator is a man who observes the future and acts before it occurs”.

As mentioned on more than one occasion, the stock market looks to the future, as opposed to the present.

This explains why share prices have performed so strongly of late, after such a horrendous time over the past 18 months.

Economic figures are a present figure, or more correctly are a past figure quantifying what has already happened.

Markets are a barometer of the near future, as opposed to the present.

They anticipate, to some extent, the downturns and the upticks in advance.

They discount the prospects of how companies are likely to trade in future years, to arrive at present values.

I recall that in November, the Bank of England was predicting a turnaround of the economy in the first half of 2009, to return to rising growth in 2010.

Five months on, it may be that their predictions were right.

“There are encouraging signs the worst of the recession might be over.”

These are not my words, but those of leading economist David Miles, the chief UK economist for investment bank Morgan Stanley, who is to join the Bank of England’s monetary policy committee in June.

He said that “moves to cut interest rates, increase public spending and boost the money supply were starting to have an effect.

Economic history teaches us that a combination of tax cuts, running large fiscal deficits, substantial cuts in interest rates and more quantitative easing is likely, with a certain time lag, to have a substantial impact on demand in the economy, and it may well be that the worst of the recession may well be behind us.”

There are certain similarities of the current recession to that of the Nineties.

Then, a housing boom turned to a housing downturn, and negative equity. This then led to a banking crisis. Sounds familiar?

The difference between now and then though is the level of interest rates.

Although real interest rates do not exactly match Bank of England rates, the Nineties saw interest rates of 12 per cent, whereas we now have 0.5 per cent.

Any mortgage arrears are more easily covered now than they were then.

It is said that there is a large amount of cash held by institutional investors waiting on the sidelines to go back into the market.

I do not know if this is fact, but I do know that the smarter hedge funds have already gone back into the market with a reverse strategy.

Those holdings that were sold short by hedge funds, driving down the share price, have now been bought long by the hedge funds, driving the share prices up.

If so, the institutional investors sitting on the sidelines with cash earning little in the way of interest, have been missing out on the strongest percentage recovery in the market in many years.

Nobody rings the bell when a stock market has reached its bottom. Bernard Baruch stated that he may miss a market low by days, weeks and even months, but the rebound was always worth the initial disappointment.

■ Anthony Platts is a divisional director in the Teesside office of Brewin Dolphin, and can be contacted on 0845-213-1340. All prices quoted in the article are from public sources. The views expressed are not necessarily held throughout the Brewin Dolphin Group. You should bear in mind that no investment is suitable for all circumstances and it is important to seek expert advice if in any doubt.

Brewin Dolphin Limited is a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority.