Fundstrat’s Tom Lee, known for his consistently bullish stock forecasts, thinks certain categories of stocks could face a bear market later this year.
Lee says in a new CNBC interview that parts of the stock market appear vulnerable due to medium-term seasonality, oil shortages and a wave of upcoming initial public offerings (IPOs) that he says could create a supply glut.
But the Wall Street veteran does think the coming bear market will spare certain prominent sectors.
“I think there will be a bear market for other stocks later this year, yes, but I think this will spare the Mag-7 and the software.
So it will be names that have either been elevated or will be affected by the fact that there is a lot of supply of new inventory later this year, or the companies that will be affected by the shortage of petroleum products. So I think there are reasons we could face headwinds later this year.”
Lee adds that semiconductor stocks “could become a bubble.”
“To me, they don’t look like a bubble yet. If Nvidia is trading at 19 times earnings, I think that’s still a good risk/reward, but I think there are parts of that ecosystem that have become quite expensive.”
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