"This is a great time to start building up your regular savings. For the portfolio of a regular saver, you need the market to fall and you need to carry on saving."

- Mark Dampier of Hargreaves Landsdown

GIVEN the continuing uncertainties over a possible war in Iraq, stock markets are continuing their jitters. How should the investor react?

First, the general consensus seems to be to hold whatever stock positions you have now. Sell only when the stock, rather than the market, suggests such an action.

As to alternatives, when war looms, gold has traditionally been a solid bet. For the past 20 years or more such has not been the case, for reasons having to do with historical aberrations in gold prices. Lately, however, gold has regained its lustre and charged ahead something like 25 per cent in a few months. The gold play may yet have value, but the chances are that the initial opportunity has essentially passed.

Cash is always a good idea, but with interest rates at their lowest for four or five decades, the return on cash investments generally will not keep up with inflation, low though that is on a historical basis.

Bonds are also usually a good idea, but the continuing weakness in stock markets has caused bonds to rise significantly in the past couple of years, and yields are not all they should be.

Then what?

Unusually, this column suggests, in the first instance, that now might be a good time to make one or two of those major purchases that you have been putting off, especially if you can fund them out of cash in hand. Prices are under pressure, and it may be possible to find almost any major new asset that you crave for a reasonable price, new cars excepted.

If spending doesn't appeal, what other choices are there?

SELECTED stocks, despite their present moribund condition, are beginning to represent real buying opportunities. The usual rules apply. Research potential investments very carefully. Select industries that have long-term prospects. Ensure that the companies you are considering are among the best in their industry, with solid track records and no bad news on the horizon. Don't buy a stock because someone else has. Use your brains.

The Daily Telegraph, a London newspaper, asked four people who ought to know just how investors should react to current conditions. Here are extracts of what they had to say.

CLIVE SCOTT-HOPKINS, director of Towry Law, said: "What stock markets don't like is uncertainty and as soon as the action (in Iraq) starts, the markets will rally strongly. If you wait until then, you will miss out on the initial surge."

He continued: "The balanced investor will have his foot in several camps: cash, equities, property and bonds. If you get out (of stocks) now, you will be making the classic mistake of coming out at the wrong time."

DAMION LARKIN, head of advisory services at The Share Centre, agreed. "People should definitely stay put," he said. "I am sure that people have grown tired of the state of the markets, but I can say with some confidence that this is definitely the wrong time to pull out. In the next (two to five) weeks we should start to see some significant buying opportunities. People might be expecting Armageddon but, on the first signs of good news, the market will rally strongly."

Mr. Larkin added: "I think a lot of the big sectors represent good value. I like banks, life assurance companies, other financials, media and technology companies."

Each of those sectors has taken a battering and should therefore represent good value when the markets start to recover.

BRIAN DENNEHY, of brokers Dennehy, Weller, said: "The bear market will end when everyone agrees the market will never go up again and shares are massively cheap. As bull markets overshoot on the upside - "irrational exuberance" - so do bear markets on the downside - "terminal despair" - and we haven't got there yet.

"Guessing where the bear market will end has absolutely nothing to do with whether you should remain invested. That is about you and your attitudes, not about markets. For example, if you can't sleep at night because of the worry, you should sell because you have no place with risk investments."

MARK DAMPIER (quoted at the head of this column) shares the view that a rebound is on the cards. "I think there will be a steep bounce when the bombs start falling on Iraq," he said. "You could see a 20 per cent move in the market in, say, three or four days."

Whether you think the bombs will start falling on Iraq will depend on your personal views. Stock markets have no emotion, and know nothing of the moralities of war.

As an investor, the best thing to hope for is a resolution, either way, of tensions over Iraq. Once that's out of the way, the markets can start looking at regular data with a degree of confidence.