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Trump's Return: Supercharged Small-Cap Stocks?

Fundstrat's Tom Lee predicts a significant surge in small-cap stocks under a second Trump presidency, along with broader market growth, despite acknowledging potential fiscal challenges.

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Donald TrumpTom Lee

What is Fundstrat's recent investment initiative?: Fundstrat recently launched a new actively managed ETF, the Granny Shots US Large Cap ETF (GRNY), which includes holdings like Tesla, Oracle, and CrowdStrike, reflecting their favored investment themes and broader market confidence.
What is Tom Lee's broader market outlook, beyond small-cap stocks?: Lee's bullish outlook extends beyond small-cap stocks; he forecasts the S&P 500 exceeding 6,000 by year-end and reaching 6,700 by 2025. He attributes this optimism to several factors, including improved earnings visibility, a dovish Fed, and the resolution of the recent election.
What is the recent performance of the iShares Russell 2000 ETF (IWM)?: The iShares Russell 2000 ETF (IWM), a benchmark for small-cap stocks, has already seen significant growth in 2023, up approximately 9% in November alone and over 39% year-to-date. This growth reflects investor optimism regarding the potential impacts of a Trump presidency on small-cap companies.
What are some potential economic challenges mentioned in relation to a Trump presidency?: While Lee acknowledges potential challenges in addressing the US deficit with tax and spending adjustments, he maintains a positive outlook on the market, fueled by the perceived benefits of a Trump administration for small-cap businesses and broader economic growth.
What is Tom Lee's prediction for small-cap stock performance under a second Trump presidency?: Tom Lee, Fundstrat's managing partner, believes a second Trump presidency would significantly boost small-cap stocks, potentially exceeding a 100% increase in the next two years. He cites historical data showing small-caps trading at a premium to the S&P 500 and anticipates further gains driven by tax cuts and economic resurgence.

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