Tom Lee, Managing Partner and Head of Research at Fundstrat and FS Insight, returns to The Julia La Roche Show to share his market outlook.

Lee was among the bullish entering 2023, with a prescient call that the S&P 500 would rise 20% to 4,750 as inflation cooled off. 

In this episode, Lee shared his 2024 market outlook, noting it’s a year that investors shouldn’t be afraid. He expects the S&P 500 will end 2024 at 5,200, but with a caveat that most of the gains will be in the second half of the year. He pointed out that his base case is the S&P could be flat or down 5% during the first half.

Looking ahead to 2024, Lee predicts positive changes in monetary policy and an earnings recovery cycle, with small caps and financials as top picks. He anticipates that small-cap stocks could outperform and rally as much as 50%. He also shares his bullish outlook on Bitcoin.

Takeaways

• The successful call for 2023 was based on the belief that inflation would be transitory and volatility would collapse.
• Investors got it wrong by focusing on a singular analogy and underestimating the importance of volatility.
• For 2024, Lee predicts positive changes in monetary policy and an earnings recovery cycle, with small caps and financials as top picks.
• Bitcoin is expected to have a strong year in 2024 due to dovish central banks and the potential approval of a Bitcoin spot ETF.

Links:

30-day free trial to FS Insight: https://bit.ly/485XjUl

https://fsinsight.com/

https://fundstrat.com/

Timestamps 

0:00 Intro and welcome Tom Lee

1:13 Retrospective on 2023 market call, what people got wrong

5:13 Mass psychology playing a bigger role than ever

6:58 Institutional and retail investors reading from the same playbook

8:42 2024 outlook, a year investors shouldn’t really be afraid 

14:12 Base case is S&P down/flat in first half, most gains in the second half

18:26 Small caps 

21:10 S&P 5200

22:00 Sector positioning

24:20 ‘Permabull’ reference is a cheap shot   

30:00 Bitcoin

32:00 Closing remarks