Altucher: Seven Reasons to be Bullish

There are seven reasons for investors to be bullish, according to James Altucher in his Financial Times column. The first three are:

* Oil prices have halved. People will now be able to pay back their subprime loans. Banks will have to start writing up the subprime debt that caused this whole mess.

* Stock prices have dropped to 2002 levels. The big difference between now and 2002: China, one of our biggest customers, is three times the size.

* People are comparing this time to the Great Depression. This could not be further from the truth. In the Great Depression, the government, in its infinite wisdom, raised taxes and increased interest rates. In other words, it continued to deflate the economy during the downturn. It took money out of the economy. Without money, people could not start businesses, banks failed, people lost jobs, people went hungry. Why did the government do this? It was afraid of putting too much stimulus in the system as people would then get into a speculative frenzy like 1929. This time the government is doing the opposite. Rather than deflating it is reflating and we'll all have to worry about any speculative excesses that occur only after the economy is back on track.

Check out the remaining four reasons by clicking on the linked article, if you subscribe to FT.com.

I see that Jim's FT column is now appearing every other week. Bummer. But understandable (it's probably a bear writing a weekly column).

Comments

[Tradememe.com]

Anyone with a long time frame such as 10 years or more sure will look back at this time as a tremendous buying opportunity.

[Patrick]

If it were so easy to end speculative bubbles caused by profligate behavior, poor lending standards, and misallocation of capital by the government coercing us to ramp up profligate behavior, weaken (by government decree) lending standards, and misallocate misallocation of capital... then why would anyone choose the painful discipline required to delever.

I am not smart enough to know how to undo what got us into this mess, but my common sense tells me that fighting overleveraging with further leverage is not the magic bullet. I don't know if the depression-era govt claimed they had infinite wisdom, but Altucher's opinions seems a little too certain in my opinion.