The biggest bull on Wall Street last year just became the most bearish strategist of 2017

Published Fri, Jan 6 20172:30 PM EST

Tom Lee, the most bullish strategist at one point in 2017, just became the most bearish soothsayer on Wall Street. In a note to clients Friday, Lee issued a 12-month price target of 2,275 for the S & P 500 index , the lowest forecast among Wall Street strategists tracked by CNBC. The new price target implies a gain of 0.3 percent from Thursday's close. Lee, who is head of research at Fundstrat Global Advisors, an independent research boutique firm he founded two years ago after a long career at JPMorgan, says there are many risks in 2017. Among those risks, the strategist believes President-elect Donald Trump may have a difficult time passing his pro-growth policies, an outcome that could lead to investors' disappointment and a potential market reversal. "A sloppy White House organization creates confusion on U.S. policy, particularly as tweets become policy," Lee wrote in his note as a potential risk. Other possible market risks include a further strengthening of the U.S. dollar, excessive tightening by the Fed and then a possible "firing" of Chair Janet Yellen as the central bank becomes a "fall guy for Trump," he said. In the first half of the year, Lee predicts the market could experience a pullback of at least 5 percent, as historical trends show a spike in volatility during the first 90 days of new administrations. Up until August of last year, Lee was the most bullish strategist on the Street with a price target of 2,325 for the S & P 500. And before the election, the strategist was among the few market pundits who said a win by Trump could cause stocks to move higher, not lower. After the U.S. presidential election, Lee tweaked his forecast lower to 2,250. Given his tepid stance on the overall market, Lee recommends investors focus on a strategy that goes by the acronym of "CRAP," which stands for computers, resources, American banks, and phone carriers. Companies from these sectors are levered to the investment recovery, inflation and deregulation, he said. Lee also recommends value over growth investment strategies, as inflation picks up and economic growth accelerates. He thinks small-cap stocks have further room to run. Along with Lee, most Wall Street firms remain timid with their prognostications for 2017, according to CNBC's market strategist survey. Among a group of 15 strategists, the average price target for the S & P index next year stands at 2,351, implying a gain of only 3 percent from the current levels.

Tom Lee

Katie Kramer | CNBC

Tom Lee, the most bullish strategist at one point in 2017, just became the most bearish soothsayer on Wall Street.

In a note to clients Friday, Lee issued a 12-month price target of 2,275 for the , the lowest forecast among Wall Street strategists tracked by CNBC. The new price target implies a gain of 0.3 percent from Thursday's close.

Lee, who is head of research at Fundstrat Global Advisors, an independent research boutique firm he founded two years ago after a long career at JPMorgan, says there are many risks in 2017.

Among those risks, the strategist believes President-elect Donald Trump may have a difficult time passing his pro-growth policies, an outcome that could lead to investors' disappointment and a potential market reversal.