Investors who are shifting their positions to hedge against volatility may be missing the year's five best days for stocks, strategist Tom Lee said Tuesday.
"Now that we're down 12 percent, the market's oversold, and we've only had one day where the market was up 2.5 percent or more; half of the best five days are that, so I think we have the potential for some really big moves into year-end," Fundstrat's co-founder and head of research said in a CNBC "Squawk on the Street" interview.
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"If you look at the last 10 years, if you missed the best five days, you had negative years seven out of the last 10 years, even though the market was up eight out of the last 10," Lee said.
Lee made his remarks as U.S. equities rallied Tuesday morning, with the three major indexes rising more than 1 percent.
He also said that the current U.S. bull market would continue on the heels of strong housing data, but there's one element that could turn him bearish.
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"If emerging markets weakness spreads into credit tightness [and] creates a U.S. recession, then I think we're in a bear market," he said.
Emerging markets have been hit hard by the recent round of volatility, with Brazil's Bovespa index falling more than 3 percent in the last month, while Chinese equities lost its 2015 gains.
Shanghai Composite index year-to-date chart