The Stockholm Syndrome isn't a market term. It refers to the bond that sometimes develops between captor and captive and was coined after a woman who was held hostage in a bank raid in Stockholm became so emotionally involved with her captor that she broke off her engagement to another bloke and remained faithful to the bank raider throughout his prison term.

But it could just as easily be a market phenomenon. Participants can find themselves hostage to fortune more times than they like to admit as the market decides to take them for a ride. Last week's raid was courtesy of the Brazilians who finally allowed the real to float on Friday following its abortive attempt to contain its decline by adopting a "maxi-band" approach earlier in the week.

From the moment the crisis came into focus on Tuesday, most people were saying that allowing the real to float would be a bad thing.

In fact, following the widening of the bands, many commentators were trashing around trying to devise a plan of action that would compensate for the loss of confidence in Brazil which would now ensue. The body armour was being strapped on as they got ready for a long and messy siege.

A floating real was characterised as a worst case scenario and would make the problems in Russia and Asia look like the teddy bears' picnic by comparison. There would be a stock market collapse and the very real possibility of sovereign default.

The picture presented was bleak. Capital outflows had continued after the widening of the bands so what would things be like in a free float? By Friday lunchtime the stock market was down another 10 per cent and trading was halted yet again. Things looked pretty awful and, almost inevitably the worst case scenario happened. The real floated.

Who knows what will happen in the coming weeks, but did the stock market immediately collapse as had been gloomily foretold? Nope. Did the Brazilians announce a moratorium on outstanding sovereign debt? Nope. Deciding that the authorities had allowed common sense to prevail the Bovespa rose a storming 33 per cent on Friday afternoon.

People who had been waiting to be rescued from the carnage that had been the Brazilian stock market couldn't believe their luck. Instead of fleeing for the door, they hung around for more. They had become so attached to Brazilian equities that they couldn't sell them. It is an interesting phenomenon in equity markets that there are limits when trading stops when the market falls, whereas when the market goes up everyone wants to hop on for the ride.

Anyway, the next piece of commentary told us the free-float now meant interest rates in Brazil would come down, exports would go up and Brazil wouldn't be trying to defend an indefensible currency position, so reserves wouldn't get frittered away. And this was actually a good thing.

There had been talk earlier in the day of the Fed's reaction to a Dow which had slid more than 250 points previously. Would they ease because of the pressure on the markets? Would raging contagion mean the bubble would finally burst in the States? Was the financial system exposed to systemic risk? Nope. The Dow went up, credit spreads narrowed and everyone ended the weekend feeling a crisis had been averted.

Well, maybe. We didn't get out of Russia, Indonesia, Korea, Hong Kong and Thailand that easily and I can't honestly believe the Latin American situation is any better, although people are perhaps better hedged than they were a year ago. But it goes to prove the markets always want things to be okay and that we'll accept the positive side of anything - especially coming into the weekend.

So I expect there will be continued concerns over Latin America and even more column space devoted to the possibility that finally something will be enough to crack the complacency of western equity markets, particularly the Dow.

In the meantime, though, investors will still pick equities because the return on cash is so low. My bank deposit account (when it actually has a deposit in it) earns something like 0.25 per cent which is hardly likely to keep me in the style to which I'd like to become accustomed. So equities offer the promise of greater returns, even if the world economy makes you think that those returns are increasingly likely to diminish.

At least I don't have Marks & Spencer shares in my massive portfolio. You might remember I handed what was once a favoured store a red card recently as it had discontinued goods I liked while stocking up on items which were boring and overpriced.

Now M & S has announced it had a horrendous pre-Christmas period and has issued a profits warning. Pre-tax 1999 profits are expected to fall by around 46 per cent. Analysts in Britain have placed sell recommendations on the stock and its debt has been downgraded from AAA to AA+ while being placed on negative watch. The share price is now around half of what it was back in October 1997. I am not surprised.

It's all about knowing your market and the bosses at M & S seem to have forgotten their's. I think they got so carried away with their trendy food-store ethos - designer meals for one or two which people bought because they needed to eat and it was better than a takeaway every night - that they decided to upgrade the clothes part of the store to match. Only they didn't. The prices certainly escalated but the quality of the clothes was pretty much the same. And they looked dull. So why would I buy a plain back top from M & S when I could get a slightly more exclusive one almost anywhere else for the same price? Answer - I wouldn't. And neither will anyone else.

For a store that made its name by selling decent quality knickers to half the women in the Western world, it's all gone horribly wrong. Actually, its quite difficult to buy plain cotton knickers there now.

I might have felt a bond with them because I've bought a lot there in the past. But the M & S syndrome is disintegrating. M & S is still a chain-store. It looks like a chain-store and you expect to pay chain-store prices. But it seems to have lost the chain-store customer. Last time I was in the shop I left without buying anything. Not even a pair of knickers. The downturn in profits and turnover can be reversed. But, like the Brazilians, the management in M & S have to peer into the abyss first. And I hope the market is being unduly harsh. But I'm not certain.

Sheila O'Flanagan is a fixed-income specialist at NCB Stockbrokers