Four Reasons To Remain Optimistic

TDR ^ | 11-28-2012 | Chris Mayer

[blam]

Four Reasons To Remain Optimistic

By Chris Mayer
11/28/12

The holidays are here. Please allow me be the first to say there’s reason for optimism.

Yes… You read that right: optimism.

I have been thinking a lot about this — about optimism and pessimism and the reasons for both — in recent post-presidential election days. It’s not that I care that Obama won or Romney lost. Please don’t misunderstand me. I didn’t (and still don’t) support either of them.

It’s the whole process that gets me down. It brings out the worst in everybody. And I am always a little blue at election time anyway because the ideas I most cherish — those quaint-sounding notions of liberty and inalienable rights that so moved the Founding Fathers — seem to have no force in the national debate. Instead, we have a free-for-all to see who gets to feast at the government trough.

Yet there are reasons for optimism: big, powerful, long-term reasons to feel good about the prospects for liberty… and for your portfolio, particularly in the U.S. Though the two are related (an idea I hope to develop more in a future letter), we’ll stick with the investing side of it for now.

(As an aside, I would like to point out that the act of investing itself is optimistic. If you were really pessimistic, you wouldn’t invest in anything. You’d spend it all right away or lock down like a survivalist.)

An editorial in last week’s Wall Street Journal by William Conway, a co-founder of the Carlyle Group, titled “Why We’re Investing in America” hit on some of the reasons I’ve started to feel optimistic again — especially about the U.S. Conway writes, “A decade ago, China was the most attractive place to invest.”

But it is no longer. As Conway points out, China has emerged. It is not the same growth story it was. And there are new challenges. A Washington Post story over the weekend highlights one of them. The article was about how so many of China’s wealthier citizens want to leave the country. If it is so good in China, why do they want to come to the U.S.?

It’s not just China. Brazil has problems. It is looking like the banana republic it was and perhaps always will be. India struggles. The EU is shrinking. Japan has mega problems. These are all big markets. And they are all in trouble.

The U.S., compared with this lot, has many attractive attributes.

Conway points to some: rule of law (for the most part), deep and liquid capital markets and transparency to degrees many other markets are not yet up to snuff on. (They are getting there, as my World Right Side Up thesis says they will.) Plus, the U.S. is a big market by itself — 300 million-plus — still the world’s largest consumer market.

And there are four more big reasons to be optimistic, some of which Conway touches on:

* The housing market is clearly recovering. It is no longer a drag on the economy. Prices have begun to recover in most cities. Investment has started to come back. I’ve been a bull on housing for a while now, and this has been a good call.

* The banking sector is also recovering. U.S. banks are on the mend. The worst problems are behind them. Recent letters to my paid-up readers have much on my bullish bank thesis.

* “The discovery and production of new sources of crude oil and shale gas is lowering energy prices, jolting the U.S. into a new energy revolution,” Conway writes. Lower energy prices are good for the economy as a whole. As we’ve covered, this is also an aid to U.S. manufacturing, which leads us to…

* U.S. manufacturing is starting to come back. I’ve written a lot about this, too. There are definitely opportunities to make stuff in the U.S. and invest with a world-class set of American companies. Conway notes that of the $4.4 billion Carlyle has committed to invest in the U.S., two-thirds of it is in the manufacturing and industrial sectors.

Conway sums up:

“Many in America and beyond have been paralyzed by fear of the fiscal cliff, frustrated with Washington’s partisanship, mesmerized by the presidential election or stunned by the post-Great Recession recovery. Any way you look at it, though, now is a great time to invest — and there is no better place than America.”

I am not quite as optimistic as Conway, but I do believe it is a good time to invest in the U.S., especially as it relates to those four bullet points above — though you still need to be choosy, in particular about the price you pay.

My conclusion should not come as a surprise, really. This is especially true if you’re a reader of my newsletter Capital & Crisis. In those pages we have come to focus on U.S. opportunities – indeed, most of the global plays have been sold off. Instead, we find our focus is on American real estate, American banks and American manufacturers.

There will still be good opportunities abroad, of course. But as you celebrate over the coming holidays, go ahead and put in a few good words for the old US of A. It ain’t dead yet.

[stockpirate]

There is really only one reason, GUN SALES ARE UP.......

[blam]

Lakshman Achuthan Vigorously Defends His Recession Call, Says We'll Know If He's Wrong Within One Month

[skeeter]

I appreciate that people who benefit from market optimism would want to stoke happy feelings but this article doesn't address the root cause of the recent economic unpleasantness (government interference in the private economy), which by the way, not only doesn't show any sign of receding, it shows every indication of re-surging with a vengeance.

[SMARTY]

I think you're right.

You can't AGGRESSIVELY cultivate a gigantic (and ever increasing) class of people who are encouraged to devalue work and laugh at saving in favor of dependence on the government, and STILL anticipate a positive economic outlook!

[Vigilanteman]

If it is so good in China, why do they want to come to the U.S.?

That's a fairly easy question to answer: Because we have more to loot here and a president who will assist them.

Same reason that foxes go where there are more rabbits.

[DTogo]

There is really only one reason, GUN SALES ARE UP.......

You beat me to it.

[Farmer Dean]

Also,According to an old German saying,”A smart fox doesn’t eat his chickens too close to home.”
Chinese understand that they can do things here that would get them shot back in China.

[Mr. Silverback]

Bump!

[wizr]

I am optimistic. This country was built on Faith. Yes, we have made mistakes, but God IS here, just as He is in Israel.

We know not what tomorrow brings, however, if we have faith in God through Jesus, we can accept whatever is put before us.

[The Great RJ]

The discovery of new sources of crude oil and shale gas will come to nothing under Obama's policies as they will not be allowed to be produced due to phony environmental reasons or take as much as a decade to bring to production because of permitting and litigation. The EPA's jihad against coal will leave much of us freezing or sweltering in our darkened homes as cleaner sources of generating electricity such as natural gas will not be available in time to replace coal. Billions will continued to be wasted on worthless windmills and bio-fuel boondoggles while our real resources will be untapped.

U.S. manufacturing is also not coming back. The burdens of Obamacare, slews of new hobbling regulations and consumers with disposable incomes lowered by higher taxes or underemployment do not bode well for any US manufacturing. Americans will only be able to afford cheap imports not US made goods.

I ceased all optimism about the future of this country on November 6th.

[steve86]

Wow. I pray for strength also but nothing like the ‘Don’t worry, be happy’ philosophy you appear to espouse. He is a vengeful God: Don’t get too complacent with your faith.

[Forward the Light Brigade]

We have many reasons to feel good. An Obama win means he will force his unpopular agenda down the throats of the American people. They will go to hate him and his poverty inducing ways—In the end only a tiny minority will support him and his ideas. Americans will react sharply and swing things to the right. Nationalism always trumps internationalism (Socialism/Communism) in the end.

[Vigilanteman]

Chinese understand that they can do things here that would get them shot back in China.

LOL! And the Detroit Kool-Aid drinkers would actually do better governed by the ChiComs.

If the program is successful, we could expand it to other libtard dominated areas in the country.

The ChiComs shoot a few of the worst ultraleft corrupt malcontents and we pay off our debt. What's not to like?

[Vigilanteman]

. . . and he will give us the tools to make the U.S. Government just and toothless on the domestic front as he is making us on the international front.