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The coronavirus pandemic is a disaster that is “worse than the Nice Despair,” however traders ought to take a “leap of religion” and spend money on stocks that might profit from the reopening of the US economic system, Tom Lee mentioned in a CNBC interview on Friday.
Lee didn’t waver on his bullish name on stocks, however did say that within the brief time period, stocks are overbought and the market must digest its current positive aspects.
Whereas a spike in coronavirus instances in some states is a legitimate concern, Lee is constructive on the truth that particular person states can open safely, pointing to states like New York and New Jersey, amongst others.
Lee mentioned he expects a “binary response” within the markets if there’s a breakthrough in a COVID-19 vaccine and even remedy, and the stocks that stand to carry out the most effective if that occurs are the “reopening stocks” like airways, casinos, and resorts.
“The most effective-performing stocks after the dot-com crash have been the web names, as a result of those that survived have been structurally long-term winners,” Lee mentioned, in protection of why he’s bullish on the stocks.
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Tom Lee will not be wavering one bit on his bullish name on stocks regardless of the worldwide coronavirus disaster being “worse than the Nice Despair.”
In a CNBC interview on Friday, the strategist mentioned traders ought to take “a leap of religion” and spend money on the “reopening” stocks that stand to profit from the US economic system opening again up.
Lee’s FundStrat ready an inventory of those “epicenter” stocks that traders ought to contemplate shopping for because the economic system slowly reopens. The “reopening” stocks embody airways, cruise traces, resorts, and casinos, amongst others.
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“If these corporations aren’t destroyed on each the fairness and credit score facet, particularly credit score, I believe they’re much more resilient than individuals understand,” mentioned Lee. “In the event that they’re exhibiting sturdiness right here, these are literally actually enticing corporations as a result of they survived the best stress check in over 100 years,” he continued.
“Those that survive are going to be unkillable,” Lee defined.
Lee identified that “the best-performing stocks after the dot-com crash have been the web names, as a result of those that survived have been structurally long-term winners,” in protection of why he’s bullish on the stocks.
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Lee can be bullish as a result of particular person states having the ability to safely open, pointing to New York and New Jersey as current examples. Alternatively, surging coronavirus instances in states like Florida and Texas show that the reopening course of for states is a fragile course of.
Lee mentioned that it is sensible for stocks to chill off, provided that they’re overbought within the brief time period and consolidation is wholesome for markets. Moreover, Lee expects promoting into quarter-end as traders rebalance their portfolios following a robust quarter for stocks.
However so long as the markets proceed to carry their 200-day transferring common, that is “excellent news,” mentioned Lee. The economic system is resilient and we are able to nonetheless get a restoration “even when we’re carrying masks and social distancing,” Lee added.
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Lee concluded the interview by observing that from the market’s perspective, any breakthrough within the improvement of a vaccine or remedy for COVID-19 will assist “traders see an actual path to normalcy” and can profit the reopening commerce.
Lee pointed to $5 trillion in cash on the sidelines and bearish sentiment as all of the extra purpose to remain bullish.
“The shortage of a vaccine has saved individuals actually cautious, that is why there’s $5 trillion of cash on the sidelines, and AAII investor sentiment is the third worst adverse studying since this disaster began so persons are as bearish in the present day as they have been once we nostril dived to 2,200,” mentioned Lee.
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