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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 put money into shares that will profit from the reopening of the US financial system, Tom Lee mentioned in a CNBC interview on Friday.
- Lee didn’t waver on his bullish name on shares, however did say that within the quick time period, shares are overbought and the market must digest its latest features.
- Whereas a spike in coronavirus circumstances in some states is a sound 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 shares that stand to carry out the very best if that occurs are the “reopening shares” like airways, casinos, and accommodations.
- “One of the best-performing shares 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 shares.
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Tom Lee just isn’t wavering one bit on his bullish name on shares 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 put money into the “reopening” shares that stand to learn from the US financial system opening again up.
Lee’s FundStrat prepared a list of these “epicenter” stocks that traders ought to take into account shopping for because the financial system slowly reopens. The “reopening” shares embody airways, cruise traces, accommodations, and casinos, amongst others.
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“If these firms aren’t destroyed on each the fairness and credit score facet, particularly credit score, I feel they’re much more resilient than folks notice,” mentioned Lee. “In the event that they’re exhibiting sturdiness right here, these are literally actually engaging firms 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 shares 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 shares.
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Lee can also be bullish as a consequence of particular person states having the ability to safely open, pointing to New York and New Jersey as latest examples. Alternatively, surging coronavirus circumstances in states like Florida and Texas show that the reopening course of for states is a fragile course of.
Lee mentioned that it is smart for shares to chill off, provided that they’re overbought within the quick time period and consolidation is wholesome for markets. Moreover, Lee expects promoting into quarter-end as traders rebalance their portfolios following a powerful quarter for shares.
However so long as the markets proceed to carry their 200-day transferring common, that is “excellent news,” mentioned Lee. The financial system is resilient and we will 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 money on the sidelines and bearish sentiment as all of the extra cause to remain bullish.
“The shortage of a vaccine has saved folks actually cautious, that is why there’s $5 trillion of money on the sidelines, and AAII investor sentiment is the third worst damaging studying since this disaster began so individuals are as bearish at this time as they have been after we nostril dived to 2,200,” mentioned Lee.
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