Fundstrat CIO and market veteran Tom Lee believes the stock market will hit new all-time high levels before 2026 comes to a close.
In a new CNBC interview, Lee says he’s sticking to his 7,700 call for the S&P 500 this year, highlighting that a military conflict is bullish for stocks and the economy.
“I think 7,700 was a conservative estimate to start, because markets have been steadily repricing on a P/E (price-to-earnings) basis, and we’re only assuming modest P/E expansion this year to 7,700. And as much as the war is creating, obviously, a huge short-term setback and a lot of uncertainty, including effects on monetary policy, ultimately, wars are going to be good for the US economy and the US stock market.
So I think as we get towards the end of the year, the market starts thinking less about the crisis element of this and more on the opportunity.”
He also says historical data show that markets tend to quickly price in the downside risk of an armed conflict.
“If we asked any investor, they can list all the reasons why they’re worried and what could go wrong. And that’s what gets priced in very quickly. But we have to know that that’s counterbalanced with opportunities that have always emerged. I mean, when we look at the last eight major war events, the market was always bottoming very early into the conflict.”
The market strategist adds that he sees investors rotating capital back into the United States, believing that US-based assets are the ultimate safe havens.
“I think we have to look at global stocks. Last year, more money was made owning emerging markets. Owning gold over stocks, emerging markets have corrected a lot more than the S&P has because the world is worried about growth. And as you worry about growth, you want to own the growth index, which is the S&P 500.”
The S&P 500 is trading at 6,506, down over 6% so far this year.
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