"Wall Street Calculator": US stocks can still rise! Investors should stick to effective strategies

As the market enters June, major stock indexes such as the S&P 500 and the Dow Jones (38589.1602, -57.94, -0.15%) are just one step away from all-time highs. Tom Lee, co-founder and head of research at Fundstrat, a financial market research firm known as the "Wall Street God of Calculation", said that investors should not stray from assets that have risen so far in 2024.

Tom Lee said in an interview: "Investors have been hesitant all year. I think we have experienced some short-term corrections, but it is best for investors to stick to proven strategies." He said there is "cash on the sidelines" that can be put into the market, and according to the Federal Reserve, there are more than $6 trillion in cash stored in money market funds.

Tom Lee said that what works in the stock market are stocks related to artificial intelligence - such as Nvidia (NVDA.US), and stocks that are highly related to artificial intelligence - such as Super Micro Computer (SMCI.US). He added that weight loss-related transactions have also performed well, that is, drugmakers that produce weight loss drugs.

Data shows that AI chipmaker Nvidia has soared 121% this year, thanks to the AI ​​investment boom and the company's strong first-quarter results and guidance. Super Micro Computer has risen 176% in the first five months of this year. Novo Nordisk (NVO.US) and Lily (LLY.US) have risen 31% and 40% respectively this year.

Tom Lee added that the industrial sector (XLI) and the financial sector (XLF) have performed well, as have cryptocurrencies such as Bitcoin.

In addition, small-cap stocks have lagged far behind large-cap stocks this year. However, Tom Lee said that the invisible rally of small-cap stocks is heating up. He said that the decreasing possibility of a sharp interest rate cut by the Federal Reserve this year has hit small-cap stocks, but this has not weakened their "fundamental appeal." He pointed out that the Russell 2000 index has much better earnings growth than the S&P 500 index, and the price-to-earnings ratio is much lower.

Tom Lee said Fundstrat’s year-end target for the S&P 500 of 5,200 is “too low” given the potential for S&P 500 earnings per share to grow to $280 next year. “I think we’re still weighing whether there’s going to be a speed bump between June and December,” he said.