One Of Wall Street's Biggest Bulls Has Suddenly Found Himself On The Wrong Side Of This Rally
And that bullishness has generally worked out for him. Last year, he basically nailed the trajectory of the S&P 500.
However, we were taken aback by a note Lee put out on February 22. It was titled "Stepping Aside Short-Term; Fade Strength and Look for Better Entry Point Around 1400-1450; Big Picture Constructive."
The title speaks for itself. And anyone who listened would've missed out on a rally that took the Dow Jones Industrial Average to its all-time high.
In a note released this morning, Lee revisits that call.
"Equities have since risen further, ending positive for February and up 2% so far in March," he writes. "What have we overlooked?"
He offers five points, which we paraphrase:
- Underperforming mutual fund managers are buying the dips.
- Announced share buybacks are surging.
- Dividend yields continue to be more attractive than bond yields.
- Tail risks, or the risk of a market shock, are fading.
- The Fed continues to reiterate its commitment to keep monetary policy easy.
Having said that, Lee is reiterating his short-term cautiousness.
"Are we still expecting a pause?," he asks. "Yes."
But just in case stocks continue to rise:
"What could go wrong with our view? It is possible that equities are entering a new phase in this bull market—lower volatility and steadier gains. Thus, the greatest risk to our view is to the upside— that rather than a pullback, the market simply is undergoing a rolling consolidation (laggard sectors fall to the wayside). Our big picture view remains constructive."