London Briefing/Chris Johns: Some classic indicators are beginning to suggest that UK equities are now an outstanding buy.

First, I have lost count of the number of newspaper articles declaring that the "cult of the equity is dead'.'

Second, it is nearly always a good time to buy when there is "distress selling".

When large numbers of investors, or small numbers of large investors, are forced to sell, irrespective of price or fundamental value, it usually means knockdown prices.

And many UK insurance companies have recently been forced sellers of stocks, thanks to an odd regulatory regime that forces them to dump equities when prices fall, thereby exaggerating the slump, threatening an uncontrolled spiral.

Now that those insurance companies have sold considerable numbers of equities, the rules have been changed so that they don't have to sell quite so many.

We might be tempted to think that it is a bit late to be moving the goalposts.

A third reason for thinking that it is a good time to go back into the market is that stocks have actually become cheap and now offer excellent value. You can now achieve dividend yields on many companies well in excess of anything that can be obtained from bank deposits or government bonds.

The UK equity market as a whole now yields almost as much as bonds. Stocks, in my view, are cheap.

Some companies might have difficulty in growing their profits and dividends going forward but it is a big call to say that the whole market - and by implication the whole economy - offers no growth potential whatsoever.

The list of counter-arguments is well rehearsed. The short-term growth outlook is deteriorating, thanks in no small part to impending war with Iraq. High oil prices, part of the same problem, will be a drag on future growth.

More generally, disenchantment with equities is very high, raising the question over just who will buy. Perhaps this is always how it feels at or near the bottom.

All of this is, in the interests of full disclosure, just how somebody that makes his living from equity markets would argue, isn't it?

An additional concern is that while stocks may be cheap, they may be signalling a much deeper malaise, one that is difficult to spot from the formal ways we normally value equities.

Living and working in the UK is becoming more like a Third World experience every day. It is common place to suggest that the south-east of England often comes close to resembling a large car-park.

Last week, this wry exaggeration became a simple matter of fact thanks to a well-forecasted fall of two inches of snow. The transport infrastructure creaks during good times and now collapses under the merest hint of strain.

The London Underground is now quite literally held together with off-cuts of wood held in place by rusty and bent nails (no joke, no exaggeration).

The UK's list of problems is familiar and always starts with the healthcare and education systems. Fondness for the NHS - which used to run across all social classes - has given way to despair verging on contempt.

London's middle-classes would not dream of sending their children to state schools.

In keeping with this public sector decay, businesses are often run in shambolic fashion. Once great companies are revealed to have been run by complete incompetents.

At a more micro level, try going into any high-street bank to do anything other than pay money in or out and the staff will look at you with fear in their eyes.

A transaction that I attempted the other day would, I was told, involve lots of forms and a three-day wait (I declined and did the transaction, instantly and over the phone, with my Dublin-based bank).

At Heathrow the other day, British Midland was in complete chaos and I couldn't even get near a check-in desk to ask about potential alternatives to my cancelled flight. Aer Lingus had me on a plane within 30 minutes.

It may be possible that I am exaggerating the decline of the UK public and corporate sectors. But the decline is real, if a little difficult to gauge with any degree of precision. And the fact of that decline may be part of what is ailing the stock market.

Decline is neither inevitable nor irreversible. But somebody has to make a conscious decision to both recognise it and do something about it.

Chris Johns is chief strategist at ABN-Amro Securities, London. All opinions expressed are entirely personal.