Basically, the arguments are:
1. The S&P 500’s year-over-year total return relative to the 10-year Treasuries has been horrendous and looks as bad as the 1932 experience. Hence, if one does want to assume that the economy is headed for the Great Depression Round Two, much of the equity market pain seems to be in place already.
2. Corporate cash levels argue for equities, but fear overwhelms everything. The 9% corporate cash to market cap level to be very important for markets in the past 25 years. Thus, even though we have moved above the 9% point, there is reason to believe that things are overdone and some support can form.
3. The worst trailing earnings developments are also supportive of equity market gains in subsequent years.
4. Poor past 10-year equity market returns provide attractive entry points for investors looking at future performance
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