Yesterday afternoon, I shared a chart graphic on my Telegram Channel summarizing insights from FundStrat’s Tom Lee during his latest in-person presentation. He outlined what we might expect in 2025. While his core ideas aren’t entirely new, they are compelling. Notably, his most optimistic view focuses on financials.
If I had to boil down Tom’s conviction, it would be this: Throughout his career, starting as a small-cap analyst during the dot-com era, he’s gained a deep understanding of this market sector and views it as cyclical in nature.
Looking at the data, small caps are currently valued very cheaply compared to large caps. This is particularly interesting because, historically, small caps have traded at a premium relative to their larger counterparts. If small caps can manage to bring their valuations more in line with large caps, investors could see significant capital appreciation from the current levels.
However, it’s worth noting that earnings growth in small caps has been disappointing so far, and some challenges remain…
