Veteran investor Tom Lee believes that investors are better off maintaining a bullish stance on the markets despite the recent pullback in equities and other risk assets.

In a recent interview on CNBC, Fundstrat’s Head of Research shared that the recent correction in equities—where the S&P 500 fell from above 6,000 to 5,832—represents an opportunity for investors to go long rather than adopting a cautious approach.

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Lee remarked, “This is another buying opportunity in our view. 2024 has proven to be a year where the market has been strong, and it has avoided many sustained periods of weakness. I know the pullback on [December 18th] was painful, but in our view, the fundamental support for stocks remains intact, making this a good opportunity for investors.”

He pointed out that the volatility index (VIX)—which gauges market expectations of volatility based on S&P 500 options—spiked sharply on December 18th. He noted that historically, such rapid surges in the VIX have often correlated with market bottoms.

“The market has been bleeding lower. If you look at the internals for the last ten days, [December 18th] looks like a capitulation, because not only did we experience a 90% down day, but the VIX surged by 75%. There are only four times in history where it has risen by 60% in a single day, and [December 18th] marked the fifth time in its 35-year history. Of those four prior instances, the market recovered all its losses within a week in three out of the four cases. In the fourth instance, it took a month.

So, what we saw was likely a panic exit from a momentum trade that was ending as we approach year-end. But here’s the interesting thing: the forward VIX futures curve barely moved. It was almost as if investors were seeking protection through the VIX on [December 18th].”

As of Friday’s close, the S&P 500 was trading at 5,930 points.

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