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Small-cap stocks could see a big rise during Trump’s second term, according to Tom Lee.
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“I think small caps could, over the next couple of years, outperform by over 100%,” he said.
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Lee predicted in July that small caps would see a 40% rise for the rest of this year.
Donald Trump’s presidency could generate monster gains in a particular segment of the stock market in the coming years, according to Tom Lee, head of research at Fundstrat.
Talk to CNBC On Friday, the leaky stocks forecaster said he expected a huge rise for small cap stocks in the years to come. This is thanks to the recent electoral victory of Donald Trump, who causes stocks to skyrocket this week as traders anticipated a new economic agenda, a more flexible regulatory environmentand lower taxes.
Small-cap stocks have performed well so far this year, with the Russell 2000 up 18%. Still, the small-cap index trades at about 10 times forward median earnings, Lee noted, reflecting a lower valuation than the S&P 500, which trades at about 17 times forward earnings.
“I think there’s still a lot of potential,” Lee said. “So I think small caps could, over the next couple of years, outperform by over 100%,” he added.
Lee, who predicted small caps Russell 2000 Index Could Rebound Up to 40% before the end of the year, also said he expected big gains to come for other assets grouped in the Trump trade, a handful of investments supposed to benefit from the president-elect’s policies.
Bitcoin, which hit a record high this week, could surpass $100,000 by the end of the year, Lee predicted. The S&P 500, meanwhile, could advance another 5% to 10% through the end of the year, he said, highlighting the magnitude of previous post-election rebounds.
« Part of the reason investors are feeling so optimistic is that President Trump is once again taking office, but this time with a lot more knowledge about how to build a cabinet and a team, and therefore, a In some ways, it ends up being more market-friendly,” he added.
Doubts, however, swirl around some aspects of Trump’s economic agenda, which experts say could fuel inflation and maintain interest rates higher and longer. It was thought that Trump’s policies were more inflationary than Harris by 70% of economists surveyed, according to a survey conducted by the Financial Times and the University of Chicago.
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