a) That we will be able to hold stocks for seven years through thick and thin.
b) That we will be able to identify which companies will survive and which ones will buckle. There is a survivorship bias in Grantham's statement.
The bullish argument is basically this: Stocks are down 50%. Government will save everything. Let's buy.
To be fair, this is the first time in over a year that stocks, credit and commodities are priced in line with each other. Over the first 9 months of 2008, equities and commodities were painting a completely different picture than what credit markets were saying. Now, that is not the case. The latest equity market rally has come in the backdrop of credit markets rallying since Dec 16, when Fed said that it will print money and buy MBS.
This is a good paper on the history of banking crises, just in case one gets too bullish. We are still in the middle of one.