The contours of the end game of the financial crisis are starting to appear, Andrew Pease from Russell Investment Group said, eloquently, yesterday as he introduced the firm’s global view of the latest developments in the financial crisis.

The Australasian investment strategist told an international phone hook-up that while the crisis was testing the nerves of long-term investors, the world was getting close to its "mythical point of maximum pessimism".

He said: "We are starting to see the classic conditions of a turning point. There is pervasive investor pessimism, valuations are extremely stretched, markets are pricing very pessimistic forecasts and P:E ratios are at multi-decade lows.

"But we want to emphasise that turbulent markets do create opportunities as well as anguish. As bad as things are, as brutal as markets have been, those investors who are able to add risk to their portfolios over the next few months will be richly rewarded."

Erik Ristuben, the Tacoma-based chief investment officer of multi-strategy solutions for Russell in the US, said that the massive and unprecedented government bail-outs should lead to better functioning credit markets, lower debt costs and then a positive response from the stock markets.

"We’re likely to be in global recession but it will not be as bad as people have feared," he said. "The market has priced in an extraordinarily negative event."

Ristuben said that the announcements yesterday (Australian time) that several European countries would follow the UK’s lead and guarantee interbank lending, would lead to a favourable response.

Pease added: "We will likely see very aggressive interest rate cuts across the globe. We will see the US at below 1 per cent and in Australia we’re likely to see a 4 in front of (the official cash rate)."