WE are still in the midst of an unprecedented rally in the global equity markets, although slightly more caution has been sneaking into the picture. What happens once the central banks exit their various stimulus programmes? Can we have a jobless recovery? How weak/strong is the real economy? I sat down with Bob Parker, vice chairman of asset management at Credit Suisse, and talked to him about what you should do if you are an investor in equities. Parker is confident the rally will consolidate over the next three months. Credit Suisse has been repositioning and Parker says investors should think about the following:<br />1) Take profits in emerging markets;<br />2) Move out of highly leveraged companies into companies that are deleveraged;<br />3) Reduce beta risk (so, reduce exposure to sectors which are volatile relative to the main indices, e.g. metal and mining companies);<br />4) Get out of small cap companies and get into large cap;<br />5) Decrease exposure to cyclical stocks (again, like the metal and mining companies), and increase exposure to defensives e.g. pharmaceutical companies, food retailers, household product manufacturers;<br />6) Increase exposure to high dividend companies – companies where the dividend payout is likely to be maintained (e.g. pharmaceuticals).<br /><br />Parker also says that bonds have become boring as the credit rally is over, but he is still holding investment grade credit. According to Parker, you shouldn’t be scared of the markets, but the key theme to think about is that there is some downside risk to get through in the near term, although the equity rally will restart towards the middle of 2010.<br /><br />Thomas Raber, managing director of hedge fund adviser Alvine Capital, is more a buyer than a seller of equity markets, as cash positions remain high and we will see more stockpiling in the next year. Equity markets could rise 20 per cent from present levels and Raber says he wouldn’t want to be short. There will be a correction of some sort, but even with quantitative easing coming to an end in the UK, and rates moving higher at some point, Raber thinks it makes more sense to be net long. He also points out the dollar denominated hedge fund industry is seeing a shift, as fund managers no longer want to buy into the weak dollar to hedge positions. Instead, he says, hedge fund managers are buying euro-denominated shares. So there you have it.<br /><br />Louisa Bojesen is a presenter on Squawk Box Europe each weekday morning on CNBC.