Fundstrat’s Tom Lee means that staying optimistic within the face of latest market declines could possibly be extra rewarding for buyers than retreating into warning.
Talking to CNBC, the top of analysis at Fundstrat emphasised that the latest drop in equities, together with the S&P 500 sliding from over 6,000 to five,832, presents an opportunity to benefit from long-term development alternatives.
Lee highlighted that 2024 has been a 12 months of resilience for markets, with downturns constantly proving to be short-lived. Regardless of the sharp pullback on December 18th, he stays assured within the underlying fundamentals driving shares and sees this as a chief second for buyers to purchase into the market.
Pointing to a major spike within the volatility index (VIX) on December 18th, Lee remarked on its historic function in marking market bottoms. The VIX, which gauges future volatility expectations, surged by 75% on that day—an occasion that has occurred solely 4 occasions in its 35-year historical past. In three of these situations, the markets recovered inside per week, whereas the fourth noticed a rebound inside a month.
Lee believes the sharp rise within the VIX displays investor panic, doubtless as merchants rushed to unwind momentum-driven positions earlier than the 12 months’s finish. Nonetheless, he famous an intriguing element: the ahead VIX futures curve remained regular, indicating that the push for defense might need been a short-term response quite than a sign of deeper market troubles. For Lee, this reinforces his view that present circumstances are a chance quite than a motive to retreat.
