Renewed hope for equity markets

When looking at the investment outlook for 2002, the first question to consider is whether or not the bear market in equities has finally ended. Having enjoyed an extended bull run during the 1990s, markets peaked in March 2000. The damage to investors' wealth since then has been considerable. The World Equity Market Index has lost about one third of its value, a similar decline to the 1973-74 bear market. Whether the recent rally does mark the end to the bear market will depend on how investors address certain issues in 2002. First, are equity markets now sufficiently cheap? We think so ...