The next few months will test the nerves of investors with analysts forecasting much upheaval and uncertainty in the markets. Bloxham Stockbrokers has warned that concerns about the millennium bug, the potential for an inflation scare and a hike in international interest rates will trigger a "wild ride" in the markets. The fortune of the dollar is also a wild card that could further unnerve the markets, according to Bloxham.

It notes that overseas investors are already starting to baulk in the face of market losses and the mushrooming US current account deficit but it points to possible opportunities in the bond market.

The broker believes the bond market has suffered huge losses this year and is now discounting rising inflation and more tightening on the interest rate front by the US Federal Reserve. Bloxham says the key timing to a bond rally will be a change in the economic and inflation backdrop so investors who anticipate this change and have the liquidity to act should do well.