Expect a Strong American Comeback

Against the backdrop of carnage and horror inflicted by terrorists a few days ago, it may appear misguided to make a bullish case for equities. Shareholders of American companies are understandably nervous and concerned about equity positions with the news so bleak and with the economy already in precarious shape.

The Market

History Shows Panic Selling or Buying Is Not a Good Strategy

Gary B. Smith: Looking to the Past for Guidance

The Argument Against Gloom

Facing a Market Transformed by Terror

Cramer: How a Few Select Individual Equities Might Fare

The Economy

Tony Dwyer: Triumph Over Tragedy Is the American Way

Tragedy -- and Retaliation -- to Strongly Affect Energy Sector

Sector Watch

Investors Will Be Seeking Safety, but Not All Will Desert Biotech

Software Firms Likely Will Forget the Third Quarter, Look to Fourth

Consumer Uncertainty Weighs on Wireless Sector After a Week of Warnings

Defense Stocks Aren't the Sure Bets You Might Expect

While I realize that volatility and anxiety will prevail in the stock market for the next 60 to 90 days, this money manager is taking a longer-term bullish posture. Here are the key reasons:

1. Monetary Stimulus: It is a classic mistake for long-term investors to sell in the face of a flood of liquidity injected into the system by the Federal Reserve. Combine that with an about-face in government spending -- fiscal austerity is now an anachronism -- and a potent brew is being mixed that will benefit the financial markets.

2. Psychology: The mood of concern and retrenchment that dominated the economic landscape before Sept. 11 is already changing. It is being replaced by anger and energy. Don't underestimate the power of the American can-do spirit, of our steadfast determination to build and achieve. Expect to see increasing evidence in the coming months that the enormous collective energy of this great nation has been re-ignited.

3. Time: Intellectually, the bearish case always makes the most sense, especially when the economy is in decline. But time is the friend of the bull. The market indices have been in a bear market for about 18 months. History suggests that the nastiest bear markets last for 18 to 21 months, at most. Get ready for something new.

Over the long term, equities outperform all other asset classes, such as money markets and bonds. The evil forces that caused such destruction Tuesday will not change that fact. Quite the contrary, expect American business to come back stronger than ever.