Years ago I had a theory, based on experience, that I could stop any racehorse in its tracks by putting £1 on it. Attempts to market this gift among my more disreputable acquaintances got nowhere.

I never convinced them that past performance was any guide to the future - nowadays you are not allowed to try.

So more recently I have hesitated to draw attention to the tendency of the stock market to take a nasty fright when I am on holiday. It happened yet again last week.

There was plenty to be frightened about. While interest rates are heading higher round the world, the Bank of England's "Inflation Report" indicated that ours will very probably have to go up, too. The money markets had factored that in for weeks, so it shouldn't have been much of a fright on its own. But it came as the dollar took another knock and the metal-price bubble seemed to reach bursting point.

The world was swirling with uncertainty. The stock market, already taking a breather, was awash with profits waiting to be taken.

The wonder was that the outcome was not a great deal worse - as it still could be.

In these situations it is worth looking at what real people are doing with real money. Tom Steiner, who runs the stockbroker TD Waterhouse catering for a lot of active private investors using his execution-only service, says trading volumes on Monday soared past all recent records, back to the levels of the boom in the late 90s.

So an exceptional number of private individuals have been in the market this week. Predictably, sellers outnumbered buyers - but by less than you might have supposed. Mr Steiner says he had eight buyers for every ten sellers on Monday, a big change from last Friday when buyers outnumbered sellers by two to one for much of the day. Headlines in some weekend papers were enough to give the most determined optimist second thoughts.

But private investors don't drive the market. It will be a while before we see the extent to which pension funds and insurance companies decide it is time to play safe, and how the hedge funds go about their professed business of making money out of volatility, regardless of whether prices are up or down.

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The Royal Bank of Scotland has hung in with its final salary pensions far longer than most and now it is closing its generous non-contributory scheme to new members. It deserves a pat on the head for trying to do so in a way that fits with Gordon Brown's new flexibility for personal pensions.

It is right, too, saying that for many people of its staff a 15 per cent pay increase - even if it will be taxed - may be better deployed paying off student debt or buying a first home, than locked into a pension fund that can never be used for any other purpose.

The catch is that some of the 85,000 employees in the present scheme will be tempted to do themselves a financial injury by quitting it and taking the cash rather than be paid 15 per cent less than new colleagues who are not entitled to join it.