The Motley Fool Previous Page

Hedge Fund Superstar Says Stocks Are Headed Higher, "Case Closed"

Morgan Housel
May 14, 2013

Let's get a few things straight:

  • The Federal Reserve is buying $85 billion a month of Treasuries.
  • The budget deficit is shrinking very fast thanks to a combination of a stronger economy, budget cuts, and Fannie Mae and Freddie Mac repaying tens of billions of dollars in bailout funds. 
  • Over the next six months, the budget deficit will likely be less than $100 billion, while the Fed will buy more than $500 billion of Treasuries.

Hedge fund billionaire David Tepper connects these dots and comes to a firm conclusion: Stocks are going higher. The Dow Jones (INDEX: ^DJI) surged on his comments.

Here he is on CNBC this morning:

In My Cousin Vinny there's this moment at the end of the movie where he's making a case and he's summing it up, and he sums it up with so many different things that the prosecution