A growing number of market commentators are raising the similarities between current stock market conditions and those seen in the run up to the 1986/87 collapse, signalling concerns for investors. But Bloxham's Stockbrokers is pointing to four key differences this time around which may be significant in fending off any immediate downturn.

The brokers suggest that the overall inflation risks are lower with global inflation locked in a steady downward trend since 1995. Against this background the world's central bankers can claim to have won the inflation war. Also the recovery in the world economy is more gradual allowing time for the ongoing digestion effects of the Asian economic crises.

These assessments suggest that the macro-economic backdrop is less threatening for both equities and bonds than in 1987, at least so far. Nevertheless, global equity valuations are stretched by about the same amount as they were 12 months ago," according to Bloxhams.

The other insight it offers from this comparison with 1987 is that European markets led the global correction, under-performing the US massively during 1986 and 1987. This has happened again in the last six months, with the US vaulting higher from the crisis-lows last October, and Europe languishing by comparison, it states.

Based on its research, Bloxham believe investors should be relatively cautious and seek to maintain a below-average exposure to equities. They should favour those markets offering good value and those which are likely to benefit from the gradual upturn in world economic growth. This amounts to remaining relatively shy of the US market in favour of most other markets.

"The main exception is Japan, where we continue to advocate adding exposure to those Japanese companies which restructure, particularly ones with a high export base, as consumer spending in Japan is likely to be fairly weak for the forseeable future.

"Overall though, we would still remain underweight in Japanese equities," the brokers state.