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Most Wall Street pros are bullish on 2018. But it’s the investment themes that one specific bull sees driving markets higher that’s eye-catching.
Thomas Lee, head of research at FundStrat Global Advisors in New York, released his 2018 outlook report Thursday and sees the Standard & Poor’s 500 stock index climbing to 3,025 by the end of the year. That’s 13% higher than where stocks ended 2017 and more than 9% above Thursday’s close of 2768. The large-stock index is up 3.5% this year.
So what does Lee like and what is he betting on? Millennials, for starters. Despite this younger generation’s well-chronicled personal finance challenges, Lee thinks this group, which is heading into its prime earning years, will buy a lot of stuff from companies, boosting their earnings.
Millennials, he notes, are “dominating automobile purchases” and entering a key home-buying phase. And despite Millennials’ perceived aversion to stocks and risk, Lee believes they “like equities” and says they favor “growth” stocks and digital-based companies.
Lee is also bullish on Bitcoin and the blockchain technology that it runs on. Blockchain innovation, he writes, will benefit companies in industries such as tech, financials, telecom and media.
Like other stock strategists, he thinks companies that benefit from capital spending and automation will fare well, as will firms that benefit from higher interest rates and inflation, such as stocks in the industrial, materials, energy, banking and tech sectors. “We are constructive on stocks in 2018,” Lee wrote.