Author : Globenews9 Last Updated, Oct 3, 2023, 8:58 PM
Business
Expect a 'violent' rally before the end of the year, Fundstrat's Tom Lee says
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Investors should remain optimistic that markets can rally before the end of the year, according to Fundstrat Global Advisors managing partner and head of research Tom Lee. “I think investors should remember that the best opportunities to really make money are during periods of fear, whether that’s March of 2023 or it was October of 2022,” Lee said on CNBC’s ” Closing Bell: Overtime ” Tuesday. “It still makes sense to be constructive, but it does feel terrible out there.” Lee’s comments follow a rocky trading session on Wall Street. All three major indexes closed lower on Tuesday, with the S & P 500 shedding 1.4% and the tech-heavy Nasdaq Composite losing about 1.9%. The Dow Jones Industrial Average , meanwhile, declined 430.97 points, or 1.3%. The Cboe Volatility Index also hit its highest level since May on Tuesday. Meanwhile, bond yields continue to soar . The yield on the 10-year Treasury hit 4.8%, a 16-year high. Lee added that while higher yields are an attractive prospect, he noted that traders should remember the longer term typically favors stocks. “The average S & P nominal return is 8%, and after a drawdown like this it’s probably 10% a year,” Lee said, noting that the long-term average of the 10-year yield is about 4.8%. “So someone could invest their money today in the S & P and earn double the return over the next decade, or they can earn half of that owning a Treasury bond.” Lee also remains optimistic that Wall Street could see a “pretty violent upside rally,” and he is sticking with a previous 4,825 forecast for the S & P 500 by the end of the year. “I’m pretty confident that we’re going to have a nice rally into year end, much higher from where we are now,” Lee said. “But it may not start — I don’t know when it starts. Maybe next week. It might start tomorrow. It could start in three weeks.”
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