Global stock markets topped out on the back of the sub-prime/credit debacle in October 2007. Prices subsequently moved lower until reaching climatic bottoms in January/March this year, triggering rallies throughout the world until a few days ago. The big question investors are grappling with at this stage is whether the rise in prices has simply been a bear market rally, or whether we are back in a primary bull market.

I have previously said: “Whereas I am doubtful about the longevity of the rally, I am also not in the Armageddon school. Is the answer perhaps a ‘muddle-through’ market, characterized by below-average returns? That is my hunch, for what it’s worth.” (See post entitled “Poll of the Week: Stock Markets – Which Way

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Equity bulls experienced another good week based on the viewpoint that the worst of the credit crisis might be behind us. A further improvement in investor sentiment and increased risk appetite caused market participants to cast aside a mixed bag of economic and corporate data and look across the “economic valley”.

This raises the question of whether the stock market euphoria is premature. Bill Gross of PIMCO (Money News) said the recovery is primarily due to federal policy moves to restore liquidity. It won’t last long, Gross warns. “Recession, and its vicious-cycle effect on employment and consumer spending, remains a threat,” Gross says. “This recession, though currently mild, and, as of yet, not even officially validated, may not be

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