The Buy Side Thesis

It has been interesting to the resiliency in the face of all the current market turmoil. As I mentioned previously, although I'm generally bearish on the market, it's good exercise to consider the other side of the coin.

True buyers (excluding short sellers) must have a thesis for their position. In light of the subprime mortgage mess, the credit crunch, and the fact that most of the nations banks have now written down practically all earned income from the last 8 years, the market appears to be holding up well. The homebuilding sector has been paradoxically rallying hard for most of 2008.

Here are a list of reasons to buy here:
1. Interest rates are low and will most likely continue to head lower.
2. Therefore, cheap capital is available.
3. We ARE or WERE in the midst of a global economic boom, until last August apparently.
4. Recent blips in the economy are more a result of the credit crunch and perceived fear by lenders due to the subprime mess rather than actual deterioration in all other parts of the system.
5. Housing will stabilize as greedy speculators are flushed out
6. There's more to the economy than housing, and frozen lenders will hate to miss out on major lending profits - given the atmosphere of low interest rates and cheap capital.
7. Lenders will therefore start lending again, only this time with higher standards, leading to better quality paper.
8. IF we are still in the midst of a global boom, the financial sector on a forward basis is CHEAP.
9. In other words, we've "fooled" the fed into cutting rates and we're at the beginnings of another boom.
10. Many players are net short - more fuel for the coming fire.