An impressionistic chart today, taken from a research note by Morgan Stanley.

As economies recover, the stimulus pumped by states into financial systems will be withdrawn and, eventually, interest rates will be hiked by central banks (a process already underway in Australia). The period between the end of a bear market and the beginning of a tightening cycle is, historically speaking, a “sweet spot” when equities post robust returns, according to Morgan Stanley’s analysts. Although European shares have gained nearly 60% in the past eight months, the analysts’ study of history—running the rule over 19 similar bear-market cycles—suggests that the rally could have longer to run.

But once a tightening phase begins, shares typically lose a quarter of their value over the course of a year or so. This correction comes against a background of rising economic growth, falling unemployment and other indicators that many associate with a bullish equities outlook. Morgan Stanley’s 2010 forecasts call for 3.7% global GDP growth and a 50% rise in average earnings per share. “It may seem surprising that we expect high growth and weak equity markets in 2010, but history is on our side,” the analysts write.