Alistair Ross Goobey, the former chief executive of Hermes Pensions Management, who famously called the bottom of the dot-com bear market, gave warning today that there was still more turmoil to come.

Now a senior adviser to the US investment bank Morgan Stanley, Mr Ross Goobey said that investors would be jumping the gun if they started buying shares now as stock markets continued to fall over liquidity concerns involving the collapsing sub-prime mortgage market.

Mr Ross Goobey said: "It is too early and value is not compelling enough to be a buyer. The yield on the market is only 3 per cent.

"In 2003, you had to be very, very bearish to think that you wouldn't make any money. People who are buying shares now will make money in the long-term but it is not clear what will happen in the short to medium term."

Mr Ross Goobey said: "I don't think that people should be really worried because the financial system is strong enough to work it out but there will be causalities and it will be uncomfortable."

On March 12, 2003, as markets continued to suffer the fallout from the dot-com era, funds were opting for bonds over equities and coalition troops were about to enter Iraq, Mr Ross Goobey started buying.

Since then the FTSE 100 index has risen 45.8 per cent to 6,056.1 points.

The index hit 6,716 in July - its highest point this year - but has fallen by nearly 10 per cent over the past week.

His assessment of whether to buy or wait until the market bottoms out contrasts sharply with Morgan Stanley, which said this week that now was the time to buy equities again, in particular, in the banking and insurance sectors.

However, Mr Ross Goobey said: "The sector that will determine if the market is bottoming or not is the banking sector and we don't know how much damage has been done or to whom yet."

Morgan Stanley, while recommending that investors bump up their holdings in banks, admitted in a note to clients this week: "Sure, there are risks and we may be too early. Markets hate uncertainty and there is a lot of it around currently. The financial risks won’t go away overnight.

"Credit markets are still in trouble. We do not know who owns what financial instrument and who sits on how big a loss.”

Nevertheless, the investment bank said that the banks were a “strong buy” after the sector’s value fell by 11.8 per cent between June 1 and August 10.

Commenting on banks, Mr Ross Goobey said: “If you look at Lloyds TSB, they have increased their dividend for the first time in some time, it does not have that much overseas banking and it is a good old fashioned commercial bank.

“But it is difficult to see what exposure it might have but we do not know the extent to which banks have been exposed. We simply don’t know.”

Mr Ross Goobey is the son of the late George Ross Goobey, the former pension fund manager of Imperial Tobacco, who caused controversy in the 1950s when he said that the fund should be invested in equities rather than gilts.

He was subsequently barred by the Institute of Actuaries from teaching students about investment, but was responsible for changing the pension fund industry.

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