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Tom Lee: Trump win could produce major bull market — here’s what I’m buying

Tom Lee: Here’s what history says about what stocks will do next
Tom Lee: Here’s what history says about what stocks will do next

The so-called Trump rally could live on ... and on, and on, according to Fundstrat's Tom Lee.

In a note to clients this week, Lee wrote that President-elect Donald Trump's term could usher in a major bull market akin to those preceded by the administrations of Dwight Eisenhower and Ronald Reagan.

"Notably, the two longest bull markets in history 1953-1974 and 1982-1999 were preceded by a Republican 'revolution,'" he wrote.

Lee likened Trump to the Republican presidents in this way; Eisenhower in the early 1950s invested in infrastructure, and Reagan pursued tax cuts and deregulation, Lee wrote, much like what Trump has promised to carry out in his presidency.

The markets have been broadly positive in reaction to Trump's win. Since Election Day, the has gained 3 percent and the Nasdaq and Dow Jones industrial average have both climbed 4 percent, with the Dow breaking through 19,000 for the first time.

At this juncture, Lee urges investors to remain "contrarian."

"And that means — don't do consensus trades. Focus on groups that have lagged in the last seven years; that means energy, basic materials, mining, steels, [communication] equipment, industrials, tech," Lee said Wednesday on CNBC's "Trading Nation."

Avoid crowded trades, he said, like health care and consumer cyclicals, what he deems "consensus trades."

And even though financials have rallied postelection, Lee points out that the group has underperformed the market since 2009 — so even though the banks have seen a nice run, it could be "five or six years of outperformance."