This year’s common complaint among professional stockpickers - Fidelity’s outgoing Anthony Bolton among them - is that they have struggled to find anything to buy. Equity valuations have been such in 2007 that very few stocks can be considered cheap by conventional measures.

So with the FTSE 100 down 7 per cent from its mid-July highs to within sight of where it started the year, the favoured lament of fund managers might now seem invalid. All the more so given that sectors such as insurance and banks have fared even worse, while the FTSE 250 has dropped a vertiginous 10 per cent.

But investors may be excused for having little appetite for bargain-hunting given the persistence of the conditions that triggered the sell-off: the credit crunch that has spread from sub-prime to non-investment grade corporate debt and undermined the source of funding for much recent merger and acquisitions activity.

But while liquidity and sentiment may have deteriorated, the outlook for corporate profits and the broader economy remains unchanged. Citigroup expects global GDP growth this year of 3.7 per cent, an improvement on its forecast at the start of 2007. That figure is 2.7 per cent for the euro zone - against 2.2 per cent in January - and 3 per cent for the UK. Only for the US have the bank’s GDP expectations deteriorated - to 2.2 per currently - on the back of a weakened housing market.

Elsewhere, second-quarter company results has given no cause for concern. In the US, analysts have on balance been raising their full-year profit forecasts, while only 14 per cent of European companies have missed their numbers since the start of June. over that time, the 12-month forward earnings multiple for European companies has fallen to 12.5 per cent - not expensive, by any measure.

Today’s further lurch downwards in the FTSE 100 - bringing its four-day loss to 415 points, or 6.3 per cent - suggests the slide is not over.

But while economic and corporate fundamentals remaining strong, it will sooner or later be time to buy. So where to look?

Seek companies with strong balance sheets, defensive earnings, growing dividend yields and larger market capitalisations, which have until recently been out of favour. Citigroup suggests the likes of BAT, Tesco, Lloyds TSB and Smiths Group as good places to start.

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