Tom Lee and Jim Cramer made the same call Monday. Buy stocks. Lee, who runs research at Fundstrat, expects 2027 to be one of the best years for equities. Cramer is pushing Amazon on any weakness.
July was brutal. The S&P 500 got hammered. But Lee pins the damage on one blown-up fund, not weak earnings. A shop called Situational Awareness, run by former OpenAI researcher Leopold Aschenbrenner, borrowed heavily to bet on AI stocks. When those trades went south, forced selling rippled through the market. The fund collapsed from $45 billion to around $10 billion.
The real damage landed on South Korea, where SK Hynix and Samsung dominate. Chip stocks there have since bounced back, but the shock was real. Lee sees it differently though. Profit forecasts kept climbing in June and July even as share prices fell. He calls that a coiled spring.
Two things unwind next year. SpaceX went public in June. Early investors faced a lock-up that expires in stages starting August 6. Up to 44% of shares could flood the market by December. The other factor is the Federal Reserve's new chair, Kevin Warsh, who took over in May. Lee expects inflation to cool as house prices soften and wage growth stays muted.
Lee raised Fundstrat's year-end S&P 500 target to 8,000 from 7,700 back in June. The index sat near 7,605 on Monday. He's looking for August to be a recovery month, with the S&P hitting 7,800.
This is informational content and not financial advice. Consult a qualified advisor before making investment decisions.
