UK: Investors must be vigilant and tread carefully

Equity markets have had a difficult start to 2008, as the ongoing effects of the credit crisis, coupled with renewed fears for the global economy, reverberate throughout the financial system. The reasons behind the credit crisis have been well documented: several years of benign economic conditions and low asset price volatility encouraged irresponsible lending, and ultimately the mispricing of risk, resulting in the global liquidity boom. The key consideration today is that the root causes of these issues stem from multi-year trends, and the sheer scale of the problem would suggest it ...