London Briefing/Chris Johns: The oldest investment cliché in the book, "sell in May and go away", has rarely seemed more appropriate.

Like many other investors around the world, the average UK punter is left wondering why his holdings of Lloyds TSB and Vodafone have been hammered by signs that the US economy is finally starting to generate some decent jobs growth.

The connections are obvious to wise old market hands but, to the rest of us, it seems that we have merely been offered another piece of evidence - if one were needed - that those academics who believe markets to be both rational and efficient are people in need of serious counselling.

The disenchantment felt by the ordinary investor in equities should not be underestimated and is a much ignored factor in the ongoing UK house-price boom. Having lost faith in equities, anyone saving for their old age is actually left little alternative: either stick the money in bricks and mortar or seek out some of those more esoteric investment vehicles called hedge funds. Most people who have given up on stock markets are not that inclined towards the exotic so they buy a flat in Manchester instead.

The most obvious reason why stocks are so unfashionable at the moment is that returns, for years now, have been so lousy. In real terms, UK stocks are still lower than they were at the end of 1998 while house prices have roughly doubled over the same period.

Of course, if we look at much longer periods than the last five or six years, equities generally do much better than property (or any other asset class). There is a widespread belief that not only are stocks prone to flights of fancy, but also that most of the good times, in terms of double-digit percentage annual growth, are behind us.

This is not an argument that says the bear market has resumed, but a reminder that one or two sensible analysts have been warning for some time that underlying market returns are likely to be low for the foreseeable future. By "low", they mean a total return (capital appreciation plus dividends) of around 5 to 7 per cent.

Nobody says that the rollercoaster ride provided by equities will change in this era of lower returns. Hence, tough-to-explain market volatility plus the prospect of unexciting capital gains over the long term means many have simply turned away from equities.

In terms of the FTSE 100, for example, a standard valuation analysis would put its equilibrium or fair value level at around 4,500. Assuming a 6 per cent annual total return implies that we will take another five years to get to the 5,000 level (four percentage points of return is provided by dividends).

This sounds terribly dull, but it still suggests a healthy real return. Most people would be happy to have significant chunks of their savings in equities yielding these sorts of numbers if only they did not have to experience so much volatility along the way.

Over the course of the last century, UK stocks have provided an average real return of 5.3 per cent - and that includes all the terrible years of the 1930s, two world wars, OPEC crises and the economic disaster that was the 1970s. Since 1950, the real return on UK stocks was 7.5 per cent a year. But the 1980s and 1990s provided the stellar returns that most salesmen fondly remember: those two decades returned 15.4 per cent and 13.3 per cent, respectively, per annum. Anybody who has based their savings plans on those kinds of returns coming back any time soon is in for a big disappointment.

But the problem is that too many people did fall into the trap of assuming high returns forever. Too many companies took pension contribution holidays during the high-return years. With the benefit of hindsight, corporate contributions to pension funds should have been maintained and the asset allocation strategy should have moved gradually away from equities.

Instead, we now have lots of pension funds assuming too high returns going forward, too high a commitment to equities and storing up all sorts of liability troubles for the future.

Ordinary savers seem to have woken up to the new world of lower stock market returns ahead of the institutions. Hence the ongoing love affair with property. That dalliance too could end in tears but, like many an unlikely marriage, it is proving much more robust than the doubters would have us believe.

The less well-known second line of our "sell in May" cliché tells us to return (to stocks) on Leger Day (generally the second week of September). Perhaps, but only if market nuttiness in the interim takes us well below our FTSE fair value of 4500.