Bloomberg TelevisionJP Morgan’s Tom LeeBack in January, JP Morgan’s famous bull Tom Lee turned heads when he took a surprisingly bearish tone on the stock market.
That was followed by a February 22 note titled “Stepping Aside Short-Term; Fade Strength and Look for Better Entry Point Around 1400-1450; Big Picture Constructive.” In other words, he was looking for a stock market sell-off.
That sell-off never came. Instead, stocks rallied and established all-time highs.
And today Lee’s admitting defeat.
“We capitulate on our “correction” call,” he wrote in a note to clients. “A stronger bull market (than anticipated) is underway in 2013, tracking more closely with a typical 5th year than we anticipated (average 5th year gain is 19%, implying 1700 by year-end).
“What went wrong with our call over the past 6 weeks, in our view, is two-fold: first, economic data, while softening, did not weaken as anticipated and more importantly, markets looked through this (the March jobs report was the final example for us) and second, the market has worked off “contrarian sell” signals (HF beta, MF beta, AAII, etc.) without correction (digesting rather than correcting).”
It’s worth noting that Lee was the most accurate strategist on Wall Street in 2012.