time let's continue this Market conversation with fun Strat Global advisers co-founder and CNBC contributor Tom Lee Tom it's great to have you on um you're constructive on stocks right now the fact that we do see the vix hitting that 20 Level the fact that we have seen stocks trading lower and and uh back at the beginning of the summer levels as well do you see this as a time to buy and if so why and what uh well there is going to be a time to buy between now and end um I mean you're just you're describing it perfectly we're in a period where fear is mounting I mean the vix is capturing that investors are are afraid to be in front of the freight train of higher rates uh but at the same time we know that the pmis have bottomed there's a ton of cash on the sidelines you know earnings are recovering and the FED is that much closer to sort of reaching the end of its tightening cycle um so to me it's a formula that when the selling ends and I I don't I I wouldn't be able to tell you if we're at that turning point but that recovery in markets could be very violent U higher um in the sense that the PE compression that we're seeing I I think is excessive and the pessimism is is excessive I mean the economy actually is holding up really well so I think I think investors should just remember the best opportunities to really make money have all come during periods of fear whether that was March 2023 or it was October 2022 too so yes I think it still makes sense to be constructive but it does feel terrible out there I it sounds like if I'm reading be between the lines correctly here that while rates could go higher yields could go higher here at least in the near term that you don't believe Tom that they're going to stay at these levels I mean Morgan Stanley's Michael Wilson saying again and I realize he's a consumate bear um but basically seeing the correlation between real rates and Equity returns has fallen deeper into negative territory I mean if you're valuing equities off of off of the bond market right now how how how much opportunity is there actually well I mean here's some simple math you know the long-term average of the tenure is I don't know it's probably around 48 I mean we're probably right there um so someone buys tenure and says I I'll earn 4.8 or 5% forever well the average S&P nominal return is is 8% or and actually after a draw down like this it's probably 10% % a year so someone could invest their money today in the S&P and earn double the return over the next decade or they can earn half of that owning a treasury bond I mean I know someone thinks 5% is competitive with equities it's not even competitive with the the long-term return of stock so I don't know where yields are going to go I I don't think we're going to be a juggernaut higher but if they're flat here at 48 since 1932 uh whenever you're at 4.8% the average S&P PE is close to 19 A5 times I mean there'd be multiple expansion coming you know in that range of yields but if if yields fall then I think multiples go up of course the TLT is a huge buy but but that would bring mortgage rates down it it would be a pretty big stimulus to the economy so I think the only risk is if rates go to seven I don't know if they're going to go to seven but that is not what I expect
