03/18/2010 05:12 am ET Updated May 25, 2011

StreetTalk -- Weak Economy, Bull Market: A Cautionary Tale

Stocks are supercharging ahead, while home prices are stalled and likely to dip
further. Asset prices in general are rising far above the economic reality that
would rationally support them. Main Street Americans are struggling to pay their
bills, while Wall Street executives are getting record bonuses. Two Americas;
trust me it's more than just a campaign slogan. It's the cold hard

Look at the dichotomy another way. The FHA is handing out mortgages
on the basis of a 3.5% down payment. That's leverage approaching 30-to-1, the
kind that brought down Bear Stearns and Lehman Brothers.

About 15 million people are competing for 2.5 million job openings. The amount
of time people are looking for a job has hit a new record high. Debt to GDP is
still high. Trillions in household wealth have been lost. A bull market in a feeble recovery cannot last forever.

At the Economist's Buttonwood Conference this month, some masters of the
universe sounded like serious worrywarts. Billionaire investor George Soros raised the specter of the U.S becoming another Japan with no growth and low
interest rates, despite the stimulus program.

The theme of my most recent
StreetTalk column for, A Bull Market In A Weak Economy Doesn't Last,
was this divide between the  booming market and the faltering economy.

In a
video interview, Whitney Tilson, founder of the hedge fund T2Partners, talked with me
about his investment strategy for these perilous times.

Tilson said he is buying Microsoft, Yahoo, Pfizer and other "blue chips that
have one or two warts on them," warts "that make prices a little cheaper." He
said he was looking for "incredible balance sheets, dominant market


"That's what you want to own if you're worried about a
pullback in the market," Tilson said.


Is a pullback coming? To
StreetTalk, the most peculiar contrast in the markets is the way stocks rise
while savers earn nothing and the dollar continues to get bombed. With foreign
investments in US Treasuries increasing to record levels, a falling dollar could
give even more of a lift to equities. But a bull market can't last forever in a
weak economy.

Watch: More Robert Lenzner StreetTalk interviews with top investors. Click here.