在周二晚些时候发布的2025年展望报告中，李列出了他认为上半年的有利因素。A well-known Wall Street bull pointed out that the historical precedent of the U.S. stock market achieving a continuous 20% annual return suggests that the performance of U.S. stocks may be worse in the second half of next year.
Tom Lee of Fundstrat has earned the respect of Wall Street for some accurate predictions regarding the S&P 500 Index and has been one of the most optimistic commentators on the stock market in recent years.
However, after the index recorded more than 20% returns for two consecutive years, Lee has become more cautious about 2025, predicting that the index will rise to 7000 points by mid-year, but fall back to 6600 points by the end of the year. This year-end forecast is positioned in the middle of the outlooks from various banks, which range from UBS Group's 6400 points to Oppenheimer's 7100 points.
In the outlook report for 2025 released on Tuesday evening, Lee listed the favorable factors he believes will apply in the first half of the year. The first is the "Put Options by the Federal Reserve" — that is, some investors believe the Federal Reserve will do whatever it can to prevent the USA economy or financial markets from collapsing.
Lee also expects the incoming Trump administration to be another "Put Option" that boosts business confidence and corporate earnings. He predicts that the so-called market 'animal spirits' will return driven by these two 'Put Options'.
Lee stated that the EPS growth for 2025/2026 could reach $275 and $300 respectively, while a weaker dollar may also enhance EPS.
Regarding his prediction that the S&P 500 Index will turn bearish in the second half of the year, Lee reviewed the historical precedents of the USA stock market achieving consecutive 20% annual returns since 1871; in these five precedents, there were four occasions where the stock market fell in the following year, with the exception of 1996. All five precedents showed that during the second half of the third year after those two 20% return years, the stock market performed worse.
Lee has concerns about the new plan for "over-efficient" government agencies, which will be led by Tesla CEO Elon Musk and former Republican presidential candidate Vivek Ramaswamy, aiming to cut the federal budget by 2 trillion dollars annually. This strategist said that spending cuts could ultimately harm economic growth, and if Trump were to implement import tariff threats, it would also impact economic growth, which poses another downside risk.
Li has always been a firm Call on the S&P 500, accurately predicting the close of 2023 and is expected to be quite close to the actual results for 2024—he raised his year-end prediction to 6000 points in October, despite expressing some caution in September. Li has stated that the Index could reach 15000 points by the end of the decade.
He stated that reflecting small-cap stocks E-mini Russell 2000 Index is a beneficiary of the market’s return of 'animal spirits', and he mentioned that the financial Industry is also one of his choices, along with Assets related to Bitcoin.
