A Bullish (But Not Too Bullish) Case for the Stock Market

For some time now I’ve been linking to arguments by stock bulls. I do this partly because my recommended portfolios have reasonable stock positions and partly because bearish arguments are easy too find and are overexposed. Investors need to see the opposing arguments. So, here’s a summary of bullish arguments from Barry Ritholz. As my headline says, he’s bullish but not too bullish. There are some bullish arguments I won’t link too, because I think they aren’t well-argued or documented.

My biggest pushback is a misinterpretation of my attempt at making larger points about cognitive foibles. I do not now, nor have I ever made exhortations that YOU MUST BUY NOW! But given my recent spate of posts on excess cash, bubbles and errors, I can see how some might get that impression. I hope this post will correct some misconceptions regarding my investment posture. (And it is just dumb luck that I am posting this on a day when futures are up strongly).

First, our discussion on recent surveys of affluent investors revealing them sitting on $6 trillion dollars and as much as 50 percent cash in their portfolios was about investor psychology. That pile of cash is not likely the result of carefully studied market history and astute observations of timing. Rather, it is most likely the result of fear. It has been a drag on portfolios for at least four years; it typically reflects a combination of poor planning and emotion.