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MARK AUSTIN THOMAS: A major European investment bank is forecasting a slump in world financial markets. Dresdner Kleinwort says according to its Fear/Greed Index, the end is nigh for the bull market. From London, Stephen Beard reports.

STEPHEN BEARD: The Fear/Greed Index measures the global market’s appetite for risk. It compares the price of shares with the price of bonds.

When the index is low, fear is the dominant emotion. Investors tread warily. But when it’s high, greed is in the driving seat and no one seems to believe that prices can fall.

The index, says the investment bank, has just hit an all-time high and that means a full-scale slump in riskier assets could be in the offing.

Andrew Hilton of the CSFI think agrees that financial markets are vulnerable.

ANDREW HILTON: There is no doubt that if there were what we call an “exogenous shock”— something that comes in from left field and swipes the markets — that a lot of people could be very badly exposed.

But the authors of the Fear/Greed Index do not expect euphoric investors to heed their warning. Said one of them, “It’ll be about as effective as yelling, ‘Cliff edge!’ to a thundering herd of lemmings.”

In London, this is Stephen Beard for Marketplace.