Photo: Bloomberg TV
JPMorgan’s chief U.S. equity strategist Tom Lee has made some pretty bullish calls lately amid widespread investor gloom.Lee was just on CNBC this afternoon and was asked to weigh in on the debate sparked by Bill Gross over the last few weeks over whether stocks as an asset class are really dying.
Lee pointed out that there are reduced expectations across several asset classes, not just stocks:
We have to remember that the world has lowered its total return expectations for any asset class. In our private bank, I think the benchmark is close to 6 per cent total return.
The only way you’re ever going to achieve that is really having a good exposure to equity markets. Bill himself said he expects stocks to basically do over double the return of bonds.
Lee said a lot of the negative sentiment toward stocks lately is really being driven by economic forecasts that may be faulty:
I think everyone’s expectations are built around a base case of an economic forecast of slow growth. We know that historically, economic forecasts are not the most reliable.
I actually think if I’d look at the market’s expectations of sort of 1.5 per cent GDP growth, I’m going to take the over. I think the driver here is U.S. housing is really driving a construction recovery that should boost overall GDP growth rates.