Tom Lee says buy stocks now as 'August sloppiness' winds down

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The Fundstrat Global Advisors' managing partner expects further signs of easing inflation will soon have the stock market resuming its upward march.

Tom Lee recommends investors take a risk-on approach starting Wednesday as he expects markets will soon bottom. "We timidly recommend adding risk starting Wednesday as we see favorable shift in risk/reward into next week, even if only 'close to the bottom,'" Lee, head of research at Fundstrat, wrote Tuesday. "Timid because it is August.

"Our view is a calculated bet that stocks are rising, despite higher rates, because the stock market is sensing this turn that Newton believes could happen in the next week or two," Lee wrote. "In other words, we are saying the last push higher in rates will not proportionately hit stocks." He also expects upcoming data will continue to show weakening inflation, citing several anecdotal reports.

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