George Leong writes: Economist Nouriel Roubini, also known as Dr. Doom, is finally on board with the stock market upswing; in fact, he believes the stock market can go even higher over the next two years.

Now, if you are familiar with the often bearish opinions of Roubini, you’ll know that his hawkish view of the stock market is somewhat bizarre, but you’ll also understand why he thinks this way.

The thinking behind Roubini’s view is similar to my own view on the stock market. Roubini believes that the concerted move by the world’s central banks to provide easy access to money via aggressive monetary policy is helping to drive the current buying in the stock market.

“In the short-term, it’s great for assets,” said Roubini about investors riding the bubble higher. (Source: Farrell, M., “Dr. Doom: Buy stocks while you still can,” CNNMoney.com, April 30, 2013.)

As many of you know, I have long been a critic of the Federal Reserve’s money-printing operations, along with the easy money flow from the world’s other banks.

Roubini predicts that the stock market will move higher over the next two years—as long as the Federal Reserve continues its aggressive stimulus strategy.

Of course, Roubini is aptly named Dr. Doom for a reason: he believes a period of reckoning is coming. And I’m on the same page.

As interest rates edge higher, investors will exit the stock market, and there will be a subsequent backlash.

I refer to this cause and effect as the impending economic Armageddon—it’s coming.

Interest rates will inevitably move higher. The low or near-zero interest rates are currently enticing investors to look to stocks and dividends for added returns, but the shift to higher rates will force some rotation away from the stock market and back into the safety of bonds.

Moreover, the higher interest rates will mean much heavier carrying costs for those who have accumulated massive debt loads during the current low-interest-rate environment.

Just take a look at the government’s massive $16.84 trillion in national debt. Wait until you see what the carrying costs will be on this debt as interest rates edge higher: it’s not going to be pretty.

So just like Roubini advised, the time for stocks is now—as long as interest rates continue to be a non-factor. It’s unclear how long the stock market will hold and edge higher.

In the meantime, ride the wonderful gains, but make sure you have an exit strategy in place for when the easy money flow dries up.

Source: http://www.investmentcontrarians.com/stock-market/why-dr-doom-is-bullish-on-stocks/1956/

By George Leong, BA, B. Comm.
www.investmentcontrarians.com

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

George Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. See George Leong Article Archives

Copyright © 2013 Investment Contrarians- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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