Okay. Confession time. I'm not really bearish on the prospects for the next 5-10 years. In fact, I am downright BULLISH. I have just been playing the devil's advocate this whole time to provide a little perspective.
It was obvious to me that the financial crisis and credit crunch were not real. They were just a product of a pathologically manic-depressive human emotion meter. A simple, but mistaken, loss of confidence. A figment of the imagination.
As quickly as it came, it was always going to go away. Duh! Any fool could see that.
Everything is fine. In fact, it is better now than at anytime that I can remember. You only have to look at the stock market to see that. And you need to remember that the stock market doesn't lie. It is an unbiased predictor of what the future holds.
For anyone willing to listen. All is right, and all will be right. We have a lot of catching up to do to get back to where we ought to be. S&P 2000 is the only fair value level given the pretense of economic damage. The firings were all a knee jerk reaction and they'll just as sooner hire everybody back again. Banks will open up their check books again, because they have significantly undervalued assets on their balance sheets. Houses will be worth what they should be worth, and equity withdrawal is likely to resume. The only thing that won't and shouldn't change is zero percent interest rates. With inflation below 2% and likely to stay there. There is no reason for short rates to rise and every reason for long rates to fall a lot further. Profit margins should expand as demand comes around and revenues increase. Because there is so much operating leverage in the corporate sector, EPS growth will be off the charts. No cyclicality, no normalization, only growth in the forecast. Concerns over public sector borrowing are pure make believe. The State has capacity to take on much more debt without so much as a flinch.
So sit down, buckle up and get ready for the ride of your life. We're getting on the gravy train.
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