Fundstrat’s Tom Lee suggests that staying optimistic in the face of recent market declines could be more rewarding for investors than retreating into caution.
Speaking to CNBC, the head of research at Fundstrat emphasized that the recent drop in equities, including the S&P 500 sliding from over 6,000 to 5,832, presents a chance to take advantage of long-term growth opportunities.
Lee highlighted that 2024 has been a year of resilience for markets, with downturns consistently proving to be short-lived. Despite the sharp pullback on December 18th, he remains confident in the underlying fundamentals driving stocks and sees this as a prime moment for investors to buy into the market.
Pointing to a significant spike in the volatility index (VIX) on December 18th, Lee remarked on its historical role in marking market bottoms. The VIX, which gauges future volatility expectations, surged by 75% on that day—an event that has occurred only four times in its 35-year history. In three of those instances, the markets recovered within a week, while the fourth saw a rebound within a month.
Lee believes the sharp rise in the VIX reflects investor panic, likely as traders rushed to unwind momentum-driven positions before the year’s end. However, he noted an intriguing detail: the forward VIX futures curve remained steady, indicating that the rush for protection might have been a short-term reaction rather than a signal of deeper market troubles. For Lee, this reinforces his view that current conditions are an opportunity rather than a reason to retreat.
