This equity bull is on its last legs

The resilient performance of global equity markets in the wake of the credit crisis has suprised some. Take a closer look at the credit cycle and it isn't so unheard-of after all - but it won't last.

One of the great conundrums of recent months is the resilient performance of global equity markets. Quite frankly, not many investors would have bet on this outcome given the severity of the credit crisis which hit us earlier this year. We certainly wouldn't have.

However, many things written on the subject have been poorly researched and/or highly prejudiced and do not stand up to closer scrutiny. One of the exceptions is a brilliant piece of research produced by Citigroup Global Markets about three weeks ago. Their analysts approached the subject by dividing the credit cycle into four phases and analysed the performance of both credit and equity during each stage.

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