Dueling Fools: 2008 Bull Rebuttal

Back in August, when the current subprime fiasco was just beginning to snowball, I read an article by James Altucher in The Financial Times. I find Altucher a voice of reason in the current market environment, and the August article was no exception, as he suggested investors "pick stocks, buy houses, don't worry."

That may be the best advice for any Fool to follow as we head into 2008. Of course, one year doesn't mean all that much for those of us who approach the market with three- to five-year investment horizons, but you know what value investors recommend doing when there is blood in the street.

According to my Dueling Fool counterpart today, the streets are already red and will only become more so in the coming year. According to Chuck Saletta, the current environment has a number of parallels to the Great Depression, politicians are only serving to exacerbate food price and other inflation (thanks in part to "idiotic energy legislation"), and the Fed is only serving to "fan the flames of economic disaster."

I can't argue with most of Chuck's specific arguments, but on balance I believe there are a number of factors that will keep the U.S. economy far from imploding in 2008. For starters, global growth will pull us through. We're already seeing the benefits of a weak dollar as foreign tourists and shoppers flock to New York and other cities to take advantage of their strong currencies. A weak dollar should also work wonders for our current account deficit, which was created from years of importing much more than we exported.

In terms of our domestic energy policy, we are already seeing signs that the ethanol craze is not all it's cracked up to be, as it is not a very economical way to create fuel. And Chuck already has identified that the housing bust is bringing home affordability back to reasonable levels, helping us gear up for the next expansion, even if it is still a few years off. Regardless of how the U.S. and other global economies perform going forward, there will be plenty of opportunities for bottom-up investors to profit.

Volatility is a good thing if you know how to be patient and use it to your advantage. In addition to the opportunities I mentioned in my opener, domestic retailers such as Bed Bath & Beyond (Nasdaq: BBBY  ) , Staples (Nasdaq: SPLS  ) , and Target (NYSE: TGT  ) look interesting, as do the credit rating agencies in Moody's (NYSE: MCO  ) and S&P, which is owned by McGraw Hill (NYSE: MHP  ) . Barring a serious recession or regulatory backlash against ratings agencies, these and other names should trade up once negativity subsides in the U.S. And don't forget about going global as another theme for 2008.  

Don't forget to:


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 557493, ~/Articles/ArticleHandler.aspx, 7/29/2014 8:09:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement