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When it comes to the market views (and hairstyles), James Altucher and Porter Stansberry couldn’t be more different.Altucher is perennially bullish and made a “Dow 20,000” forecast on The Daily Ticker earlier this year.
Given all that’s gone on in the past few weeks — S&P’s downgrade, huge market swings, Europe’s implosion, the debt-ceiling dysfunction, etc. — we thought it’d be fun to get Altucher and Stansberry together for an old-fashioned bull-bear debate.
True to form, Stansberry remains extremely negative while Altucher is resolutely upbeat.
“A lot of great things are going on,” Altucher says, citing:
- Stronger-than-feared economic reports such as ISM, jobless claims and housing starts.
- Strong second-quarter earnings and attractive valuations on stocks such as Apple.
- Corporations starting to put cash to work via mergers and/or share buybacks.
The Brewing Storm
As you might imagine, Stansberry disagrees. He’s recommending clients be 50% in gold and 50% in cash if they’re not willing (or able) to actively short stocks.
Stansberry believes Europe’s debt crisis will only intensify in the coming year, predicting Italy’s Unicredit will be “the next big domino to fall.”
If Unicredit fails, “Italy can’t bail it out and Germany will not bail Italy out,” he says, predicting Germany will leave the EU within the next 12 months.
But Stansberry is even more bearish on the U.S., predicting the dollar will lose its reserve status and the Treasury “bubble” will burst. “There’s a huge storm brewing,” he says. “Everyone with any sense is leaving the [Treasury] market, including a lot of our trading partners and central banks.”
By his own admission, Stansberry has been wrong about the Treasury market, which showed incredible strength last week, even after S&P’s downgrade.
Altucher, of course, sees it differently. The “flight to safety” trade into Treasuries is a sign of “people’s confidence in the dollar as the ultimate reserve currency,” he says. “That’ll continue to be the case as long as we continue to be the leaders in innovation, creativity, biotechnology, Internet technology. I don’t see that changing at all; in fact I only see that growing.”
Stansberry’s counter: Altucher is “mistaking liquidity for security,” he says, noting gold also surged last week while last Thursday’s 30-year Treasury auction was lousy, at best.
As you’ll see in the accompanying video, Altucher and Stansberry don’t agree on much and could probably go back and forth with the point-counterpoints for hours, if not days.
What do you think? Who’s right or are they both just plain nuts?