Stock Market Guru Tom Lee Unveils His 2015 Forecast, And Boy Is It Bullish

Sam Ro

Dec 18, 2014, 18:12 IST

FundstratTom Lee

"Be contrarian," says Tom Lee. "Investors are expecting 2015 to be a low-return year and are focusing on deflation and Fed tightening."

Lee, the former chief US equity strategist for JP Morgan and current head of Fundstrat Global Advisors, expects the S&P 500 to hit 2,325 by the end of 2015.

That would represent a massive 15% gain from Wednesday's closing price.

Since its March 2009 low, the S&P 500 has surged by over 200% to today's levels.

"The buyside is fairly cautious, seeing downside stemming from: (i) deflationary pressures of the 40% year-over-year oil decline, deceleration in China, Eurozone weakness and the fall in 5-year inflation breakevens; and (ii) Fed monetary tightening," Lee said.

Among other things, Lee continues to see returns fueled by growth in investment spending as equipment and structures continue to get older.

"Capital stock is again showing signs of pent-up demand, and as a consequence, companies and households will have to invest," he wrote. "In other words, obsolescence is playing a role here. Equipment needs to be replaced as it reaches the end of its useful life."

All of this fits into Lee's longer-term call that we are in the midst of a secular bull market.

Lee entered 2014 as the most bullish strategist on Wall Street with his forecast that the S&P 500 would hit 2,075 by year-end. The S&P cleared that hurdle on December 4.

Now, Lee joins RBC Capital's Jonathan Golub as being the most bullish Wall Street strategists followed by Business Insider. Here's what other top Wall Street strategists are expecting for next year: