Fundstrat Global Advisors co-founder and chief researcher Tom Lee, a Wall Street analyst known for his extreme optimism, has issued a rare warning. He predicts that after a historic surge to new highs, the US stock market will inevitably experience a 20% crash, outlining a detailed timetable for this “rise first, then fall” roller coaster.
(Background: Bitmine invests another $100 million to buy 51,000 ETH! Tom Lee says: dips are buying opportunities)
(Additional context: BitMine’s valuation surpasses $8 billion! Ethereum drops below $2,000, can Tom Lee’s 4.3 million ETH holdings hold up?)
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- New highs first, then the turning point to a bear market
- Counterintuitive logic: Why high oil prices could be good for US stocks?
- After the crypto winter, the speculative bubble has burst
Renowned Wall Street analyst, co-founder and chief researcher of Fundstrat Tom Lee, has made a notable prediction about the US stock market. He states that although the US stock market will face a 20% decline later this year, the S&P 500 will continue rising in the coming weeks, potentially reaching a record high of 7,300 points. Amid concerns over inflation and energy crises, he remains optimistic about short-term US stocks and offers a unique view that “high oil prices are beneficial for US stocks.”
New highs first, then the turning point to a bear market
Tom Lee explains that software stocks, the seven major tech giants (Mag-7), and the cryptocurrency sector have already experienced an early bear market, which has effectively cleared out much speculative activity. Based on this consolidation, he expects US stocks to show positive returns in March and reach a high of 7,300 points later this year. However, he warns that when the market stops reacting to good news, it’s a sign that a bear market (estimated 20% decline) is imminent.
Counterintuitive logic: Why high oil prices could be good for US stocks?
In response to recent oil price surges, Tom Lee presents a counterintuitive view: high oil prices are actually good for the US stock market. He explains three main reasons: First, the US is a net oil exporter, so its economy can benefit from high oil prices. Second, compared to other countries heavily reliant on oil imports, the US’s relative economic growth will be stronger, attracting international capital back to the US. Third, when global economic growth becomes scarce due to rising costs from high oil prices, investors tend to buy growth stocks for risk hedging; since the US stock market is dominated by growth stocks, it will attract global funds.
Regarding tech stocks, Tom Lee believes software stocks have bottomed out. He notes that many negative risks have been priced in, with the forward P/E ratio of the software sector (e.g., IGV ETF) falling to around 16, comparable to cyclical stocks. Given that many software companies have durable and stable business models, he sees now as a good buying opportunity. Additionally, because high oil prices could pose risks to the real economy, this makes growth stocks (like tech) more attractive, potentially outperforming the broader market.
After the crypto winter, the speculative bubble has burst
Regarding the recent crypto market, Tom Lee admits that Bitcoin has not served as a “digital gold” hedge during recent turbulence—in fact, Bitcoin has fallen when gold rose. This is mainly because last October, the crypto market experienced the largest deleveraging event in history. However, he also points out that after this harsh “winter,” much of the speculation and excessive leverage in the crypto market has been cleared out.
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