Friday, March 23, 2012

4 Reasons The Bears Are Wrong And More Bubbles Are Coming

Bearishness in nominal terms - meaning expectations that broad indices like the S&P 500 (SPY) will decline - continues to be rampant: David Tice is calling for an S&P target of 1,000; John Hussman warns that the market is overbought; David Rosenberg says it's looking like the bear of 2011 all over again.

I tend to disagree. I already shared my technical view, in which I expect SPY to reach 182 by 2014, but here's a recap of the four fundamental reasons I think the bull market in equities that has kicked off 2012 is far from over:

1. Like Blackrock's Larry Fink, I think the weakness of the bond market is a major driving factor. It is not so much that equities are such a great opportunity as it is that money has to go somewhere -- and bonds do not look like the right answer. This may be a question bears should spend more time considering: if not stocks, then where? Granted, the "problem" of where to put all their money is not really an issue individual investors/traders like myself face, but for the super-rich and the mega-funds, it's a very real issue. Some will go to gold, some will go to fine art, some will be in cash...but when all the options are considered, I believe more is due to be allocated to stocks, simply because the size of the bond market and its current weakness are driving factors. Read more.......

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