Veteran analyst delivers stark message for investors in stocks

Veteran strategist Tom Lee believes the stock market can still rally sharply, despite the risk of a major drawdown in the back half of the year.

The Fundstrat co-founder believes the recent market choppiness has already cut away much of the speculation that usually precedes a market peak, he said in a recent CNBC interview. 

That reset paves the way for the S&P 500 to jump toward 7,300 later this year, even though Lee warns that a 20% drop in markets is likely, triggering a bear market.

At the time of writing, the S&P 500 index was trading at 6,781.48, per Yahoo Finance’s delayed quote data, last updated on March 10, 2026.

Nevertheless, the index is still up more than 22% over the past year, but in the near term, gains have slowed. The S&P 500 is up just 0.9% year to date and about 1.7% over the past three months, according to historical data from Yahoo Finance.

Put simply, the path ahead is unlikely to be linear.

“We’ve already had a bear market in several areas,” Lee said, underscoring the steep pullbacks in software stocks, mega-cap tech names, and cryptocurrency.

For perspective, the S&P 500 has struggled to carve out a clear path in recent weeks amid multiple headwinds, including rising oil prices, geopolitical hiccups, and growing uncertainty around inflation and interest rates.

In fact, amid the Iran conflict, I covered Goldman Sachs’ stark view that sustained high oil prices will push CPI higher, pointing to a rocky road ahead if there’s no clarity in the near term.

Speaking of inflation, the latest CPI report was released today, March 11, showing prices rose just 0.3% sequentially in February, while core CPI increased 0.2% month over month (2.5% year over year). Stock market investors welcomed the softer reading, with markets opening in the green. 

Nevertheless, Lee believes that with much of the speculative froth now cleared out, a temporary window of opportunity may open as stocks bounce before a broader downturn takes shape.

Veteran strategist Tom Lee shares new views on market risks, growth stocks, and shifting investor sentiment.

Santiago/Getty Images

Who is Tom Lee?

Tom Lee isn’t your regular TV market bull. 

In fact, he has built a powerful reputation for marching to the beat of his own drum when it comes to stock market calls.

With more than 25 years of equity research experience, he currently serves as managing partner and head of research at Fundstrat Global Advisors.

To add even more weight to his credentials, his firm reports that he has been ranked by Institutional Investor every year since 1998.

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Before launching his Wall Street shop in 2014, Lee served as J.P. Morgan’s chief equity strategist from 2007 to 2014, giving him the Wall Street pedigree to which investors typically pay close attention.

Over the years, Lee has made multiple prescient calls that left his fans laughing all the way to the bank.

For instance, The Wall Street Journal notes that he correctly urged investors to buy the dip during the Covid-driven market meltdown in 2020.

Lee’s 2023 S&P 500 target also came within touching distance of his actual year-end call, Business Insider reported.

Additionally, he has built a name in the crypto world, becoming one of the first major Wall Street strategists to publish formal bitcoin research.

Lee predicts a market bounce before a deeper selloff

Lee’s view on the stock market is far more nuanced than many people assume.

Contrary to the gloomy scenario often pushed by Wall Street pundits, he believes the market isn’t ready for a true bearish leg just yet.

A lot of that is because we’ve already seen a ton of damage being dished out across other speculative corners of the market. 

So, before the broader index breaks, Lee feels the market usually pre-cleanses through steep corrections in high-beta areas. That sets the stage for the S&P to efficiently recover before we have the “real” breakdown.

He lays out the roadmap, saying that the stock market might “pause it for March” and possibly “hit 7300 later in the year.” Only then, he says, “a bear market might show itself.”

Higher oil can actually help U.S. stocks

Perhaps the most provocative part of the interview was when Lee was quizzed about his bullishness over higher oil prices. 

In response, he doubled down, saying that “we think higher oil prices are actually good for the U.S. stock market.”

For perspective, oil markets have seen tremendous volatility since the Iran conflict began. Brent crude surged from nearly $73 in late February to as high as $119.50 intraday on March 9 before pulling back, Reuters reported.

Related: 5-star analyst revamps Micron stock price target before earnings

Lee argues, however, that the U.S. exports oil, so as an economy, it’s likely to benefit overall. 

That doesn’t mean the little guy gets squashed in the process, but compared to oil-importing economies, the U.S. is better insulated. That also makes U.S. growth stocks feel much more attractive relative to the market.

“When growth is scarce, people buy growth stocks,” he added. “The U.S. stock market is a growth index.”

Considering the S&P 500 isn’t the economy, Lee argues that it’s more of a growth-heavy equity machine, which is usually where investors run when the rest of the world looks shaky. 

Software and bitcoin have gone through their purge

Lee says software stocks and crypto bellwether bitcoin have already taken their licks, the sort of sell-off that often comes before markets stabilize.

“I think software has bottomed,” Lee said, with his reasoning centering on valuation compression. 

For example, the iShares Expanded Tech-Software Sector ETF (IGV), a proxy for software stocks, has been taken to the cleaners of late. 

For some context, here are the returns for two representative ETFs and bitcoin across multiple time horizons.

MAGS ETF: YTD -6.11%; 6-month +0.42%; 3-month -6.47%IGV ETF: YTD -18.5%; 6-month -22.1%; 3-month -21.7%Bitcoin: YTD -19.13%; 6-month -39.99%; 3-month -25.14%
Source: Slickcharts, Bloomberg

Nonetheless, many software giants have pretty durable business models, backed by recurring sales and healthy margins, so the reset now offers an attractive entry point for investors.

Lee sees the same pattern forming in bitcoin.

In his words, the cryptocurrency has endured what he calls the largest deleveraging event in its history, underscoring a steep market break last October that wiped out speculative leverage.

“We’ve gone through a winter where a lot of the speculation and the leverage is gone,” Lee said.

Taken collectively, both areas represent excellent opportunities for buy-the-dip investors looking to effectively cash in on the market’s current sentiment.

Related: Bank of America drops shock message on the stock market

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