Strategist
Tom Lee is known for perennially serving as one of the biggest bulls on
Wall Street, but when asked about the month ahead, he's striking a
markedly cautious tone.
"August scares us," the co-founder of Fundstrat Global Advisors said Monday on CNBC's " Trading Nation ." He pointed to two troubling stats in particular.
Lee
observes that going back to 2009, the S&P 500 has fallen an average
of 6 percent during the month of August — a stat that jibes well with
the "sell in May and go away" line of thinking.
Further,
the odds of a slip could be even greater this year, given that "the
bond market has become a lot more volatile than equities, and whenever
this happens, 68 percent of the time, the stock market falls in the
following month."
This adds up to a "pretty scary" outlook for next month, Lee said. However, after an August slip, Lee expects a fall rip.
Or, as the strategist memorably put it in a recent note to clients: "sell the beach, buy the teach."
More
specifically, Lee says that once the S&P falls to 2,100, "we think
you should buy it," in anticipation of a substantial rally to Lee's
2,325 year-end price target. It closed Monday at 2,168.48.
Indeed,
the long-term minded "shouldn't do anything, because a 2 to 3 percent
sell-off isn't enough to warrant a big shift in a portfolio. But 2 to 3
percent for an active manager is relative performance."
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