As we all know, there is nothing called a 'good, runaway yet reliable' boom. Guess, that is the first lesson to learn if you are an investor in the stock markets. But alas, while we all love bull runs, we refuse to acknowledge that every crest has its trough and vice-versa.

As Ramesh Damani, member, Bombay Stock Exchange, puts it, "Investors should realise that they have had four years of double-digit returns from the stock markets." Clearly this is the year of consolidation, a year of some jitters and more importantly, some negative vibes from all kinds of asset classes. So it is time your expectations need to be pared down to include this effect.

Let us start with property. Home loans and home buying have been big news in the last two years because of a spate of rate hikes fuelled by signals from the Reserve Bank of India. The apex bank has also increased the risk weightage for the real estate sector. The government has followed it up by imposing 12.5 per cent service tax on the sector.

So everyone who matters believes that the sector is overheated.

Says Akshaya Kumar, CEO, Park Lane Property Advisors, "In the next 12-24 months, I see a lull in the property market, followed by a 10-15 per cent drop in prices." He thinks that the fall will be on the higher side in the peripheral areas like Noida, Gurgaon and Thane where extra supply is likely to come in. And his advice is, if you are not that desperate, postpone your buying decision.

Obviously, this also implies that returns on your property investment are likely to be static, or may even fall. But if you are staying in the house, it anyway does not make sense to sell it, even if the equated monthly installment (EMI) is jeopardising your household budget. Of course, if you have invested in your second or third property, it is time to sulk. But think of earning rental incomes instead of capital gains. This would help offset the losses.

Time for some equity analysis. Over the past four financial years, the Sensex has earned a compounded annual return of 44 per cent, with 2003-04 and 2005-06 being exceptionally good (over 70 per cent). But things should start changing henceforth. With volatility being the order of the day and one big slide of 617 points (April 3, 2007) followed by smaller gains of 150, 169 and 70 points the next three days, it is clear that the markets are settling at lower levels. "Expect the Sensex to be range bound between 12,000 and 15,000 points this financial year," adds Damani. This simply means that market volatility is here to stay.

Returns, as a result, are definitely likely to suffer. Madan Sabnavis, chief economist, NCDEX pegs stock market returns at over 15 per cent this year. Yes, they may look similar to the year gone by, but once inflation comes into the picture, the numbers go down significantly.

With the RBI coming down heavily on inflation, there are clear signs that the yield from fixed income instruments will go up. On the interest rate front, Sabnavis feels, that another small hike of 25 basis points could occur in the next six months. The logic behind this is that due to consistent hikes in the rates of interest, demand-pull inflation is likely to be down for the rest of this year. So there will not be much cause of concern for the apex bank. The returns from fixed income instruments are expected to be to the tune of 8-10 per cent. But again inflation adjusted returns would be around 2-4 per cent.

So what kind of portfolio should you have this financial year? Damani suggests that one should keep 10-15 per cent of your portfolio value in cash as it is a good hedge in volatile markets. Says A K Sridhar, chief investment officer, UTI Mutual Fund, "Even in this market, I would say that one's exposure to equity should be to the tune of 30 per cent."

According to him, the rest of the portfolio should entail 20 per cent investment in gold ETFs, 20 per cent in capital guarantee funds that protect the principal and the remaining 30 per cent in bank deposits, fixed deposits and other traditional forms of investment. This portfolio, he feels, should fetch returns of 15-18 per cent a year. That is, two and a half time over the existing inflation rate of 6 per cent.

Yes, the numbers do not sound too impressive. But remember, it is still not a bust.