INVESTOR extraordinaire Warren Buffet advised those in search of success in investment to “be fearful when others are greedy, and greedy when others are fearful”.

That maxim would have been well applied at two notable points in recent memory.

At the height of the dotcom boom in 2000, each new dot-com stock could raise an extraordinary amount by floating its shares, as profithungry investors snapped up the shares with an indiscriminate appetite – the classic hallmarks of greed in capital markets.

In hindsight of course, it was a great time to sell as stock markets the world over came tumbling down as the bubble burst.

Contrast that with sentiment in March last year. Markets had been ravaged by the onset of the credit crunch, and with economies mired in recession, the outlook based on the flow of news was bleak. No one knew how long the storm would last and what damage would be left behind. Mass fear pervaded the markets.

If you had countered the trend and bought a FTSE100 tracker in March last year, you would have made more than 55 per cent return on your capital alone. Some individual stocks have gained four or five times over in the period, some more.

Which leads me to my main point. The above strategy is all well and good under conditions of extreme mass emotion, but what about at times such as today? Everyone I speak to or hear from, which includes clients, friends with no real investment knowledge and professional fund managers, are at a loss to call the direction of the market.

There is no discernible momentum in either direction. It is almost as if the bulls and the bears are two boxers dancing round each other waiting for the other to throw the first punch. Whether we see the much vaunted “double-dip”

recession will go a long way to determining who wins.

What you find in such situations is that it is less easy to uncover stocks capable of producing abovemarket returns. Note that I say “less easy”, not “impossible”. In any market conditions, there are stocks that will perform well; it is the job of the professional investor to find them.

Those stocks are often, even usually, those that have been previously unloved. It could be for a multitude of reasons: they might be in an unpopular sector, and there be nothing really wrong with the company; or they might have had debt problems, and have renegotiated their debt terms. These companies exist in all conditions.

So where might they be hiding at the moment?

Well, I am not going to give away all my trade secrets, but looking for unpopular sectors as examples, look no farther than housebuilders – Taylor Wimpey, Barratt and the like. There could well still be sufficient fear to justify (selectively directed and thoroughly researched) greed.

What is holding the sector back is economic uncertainty, high unemployment, which is stifling demand and keeping house prices low, and a lack of mortgage supply. The question I would pose is: “Do you wait for the news to improve, for the masses to wise up, and for prices to get away from you?”.

Whether or not you are hot on housebuilders does not matter, but this strategy holds for all companies and sectors, in my opinion.

A long-term view is needed.

In my view, 2010 is a year to pick stocks rather than call markets.

■ Nick Williams is an investment manager 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.