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Small-cap stocks could be on track for a big rise during Trump’s second term, says Tom Lee.
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“I think small caps can outperform by more than 100% in the coming years,” he said.
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Lee predicted in July that small caps would be up 40% for the rest of this year.
According to Fundstrat’s head of research, Tom Lee, Donald Trump’s presidency could lead to monster gains in one corner of the stock market in the coming years.
Speak with CNBC On Friday, the permeable stock forecaster said he foresees a big upside small cap stocks in the coming years. This is thanks to the recent election victory of Donald Trump caused the shares to rise this week, as traders anticipated a new economic agenda, a a looser regulatory environmentand lower taxes.
Small-cap stocks have done well so far this year Russell 2000 increase of 18%. Still, the small-cap index trades at about 10 times expected average earnings, Lee noted, reflecting a lower valuation than the S&P 500, which trades at about 17 times expected earnings.
“I think there’s still a lot of upside,” Lee said. “So I think small caps can achieve over 100% outperformance in the coming years,” he added.
Lee, who previously predicted the small-cap The Russell 2000 index could rise as much as 40% before the end of the year, he also said he sees big gains on the horizon for other lumped assets Trump Trade, a handful of investments thought to benefit from the president-elect’s policies.
Bitcoin, which hit a record high this week, could rise above $100,000 by the end of the year, Lee predicted. The S&P 500, meanwhile, could rise another 5% to 10% through the end of the year, he said, noting the size of previous post-election rallies.
“Part of the reason investors are feeling so optimistic is that President Trump is coming back into power, but this time with a lot more knowledge about how to build a cabinet and a team, and so in some ways this ends up being more market-friendly . ”, he added.
However, doubts are emerging about some aspects of Trump’s economic agenda, which experts have warned could be the case fuel inflation and keep interest rates high longer higher. Trump’s policies were thought to be more inflationary than Harris’s by 70% of economists surveyed, according to a survey conducted by the Financial Times and the University of Chicago.
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