Why the Bears Are Wrong

Yesterday, James Altucher had a good article in the WSJ detailing the bearish arguments against stocks along with his responses. Here’s a sample:

• Many homes are still in foreclosure or under water:
• Although forececlosures last month were still 6% higher than the year ago period, they were 2% less than last month. The 6% is the lowest year-to-year increase since January 2006. The rate of foreclosures are decreasing and the fact that we had a month-to-month decrease in foreclosures suggests that the 50-month stretch of year-to-year increases could be coming to a close.
• The Case-Shiller Housing index has been up for the past six months, suggesting prices are stabilizing
• When a foreclosure happens, people have more money to spend (they are no longer spending on mortgage.
• The housing declines began in 2006. The market top didn’t happen until November, 2007 and the collapse didn’t happen until Lehman collapsed in September, 2008. The market collapse was more a function of the financial collapse and then the “Great Liquidation” (see below) than the housing collapse.

Posted by on March 17th, 2010 at 9:00 am


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