Money manager Joan Lappin, who is the head of Gramercy Capital Management, won’t be running Sunday in New York City’s Marathon, but her 19-year-old investment firm is making a credible run in this year’s sloppy market by outdistancing the major averages.

Taking note of the market’s renewed strength in recent sessions – “Samson’s got his hair back,” she says – Ms. Lappin figures stock prices are headed up despite such investor concerns as rising interest rates, the prospect of permanently high energy prices, renewed inflation worries, deterioration in the credibility of the White House, and a burgeoning army of worried consumers, as exemplified by recent reports that show plummeting consumer confidence.

Ms. Lappin might well be dubbed Lady Sunshine, based on a market outlook calling for double-digit gains in the major averages over the next 12 months, in some instances of more than 15%.

The market’s mediocre performance this year, however, coupled with a generally sloppy October showing, has turned off a lot of investors from stocks, and even some bulls are beginning to pull in their horns. For instance, Standard & Poor’s, which had been predicting a strong 2005 market, now sees a gain of less than 1% and is urging investors to trim their domestic equities exposure and increase their overseas holdings. As S&P sees it, “Few [American] investors will be delirious with excitement over the next 14 months.”

However, our Lady Sunshine thinks investors should be stocking up on stocks. Why? For starters, she notes, despite a bevy of bad news – such as ballooning interest rates, a whiff of scandal in the White House, the surge in oil prices, hurricanes, an out-of-control budget deficit, and ongoing concern about the dollar – the market has refused to crater. Likewise, she feels “there are a lot of things converging to make this [stock market’s] bargain basement opportunity head higher.” Chief among them, she says:

1. A lot of liquidity, notably $5 trillion worth, is sitting in money-market funds.

2. The advent of fiscal responsibility is just around the corner. As bad as the president’s ratings are, Congress’s ratings are even worse, Ms. Lappin says. As such, she believes Congress will move shortly to lessen the deficit, in turn revitalizing the dollar and spurring increased overseas investments in American stocks.

3. The newly nominated Fed chairman, Ben Bernanke, is in the Alan Greenspan mold, which should encourage the market.

4. Interest rate increases are in the eighth or ninth inning. Ms. Lappin recalls that the stock market took off big time in 1994 when the Fed stopped raising rates.

5. Real estate, given its big price runup, has just about run its course as an alternative investment to stocks.

6. The economy – Hurricane Katrina, notwithstanding – is still climbing, but instead of a 3% to 4% pace, maybe at 2% to 3%.

7. Oil prices were inflated by hedge fund managers and commodity traders who speculated in oil futures, but they’re likely to be less bullish, given falling prices and increased inventories, which could drive crude even lower.

8. Price/earnings multiples are at record 10-year lows, with rising rates leading to p/e compression. But when rates stop going up, Ms. Lappin notes, p/e multiples will expand.

9. Corporate America is healthier than it has been in years. Taking advantage of the low interest rates, most corporations have bought in or called their high interest rate debt and rolled it over at much lower rates.

What about the sharply rising competition from foreign securities? Ms. Lappin’s view: Buyer beware! Noting that mutual fund companies are all promoting investing abroad, she points out the last time they suckered people into doing that was 1996, just in time for the Russian bond default and the Asian collapse of 1997 and 1998.

So far this year, Gramercy is outpacing the generally flat market averages with a gain of about 3.5%.Three of her favorite stocks for the next 12 months – each of which she views as a potential 50% gainer in this period – are McMoran Exploration ($17.48), Sirius Satellite Radio ($6.98), and MEMC Electronic Materials ($20.16). Two additional stocks she favors – Motorola ($23.14) and Tidewater ($47.93) – are thought to be likely 30% gainers over the next year. All five, she contends, not only have strong fundamentals, but they’re selling at “value prices.”