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Tom Lee says this sector will be the easiest trade in the next 5 years

Dario Pignatelli | Bloomberg | Getty Images

In the next five years, technology may be the easiest trade to make, Tom Lee, founder of Fundstrat Global Advisors, said Thursday on " Squawk Alley ."

With policies turning away from regulatory creep on big business, and toward pro-business initiatives, Lee said investors should look at banks (NYSE Arca: XLF), energy (NYSE Arca: XLE), tech (NYSE Arca: XLK) and telecoms (NYSE Arca: XTL). While the technology sector has not performed well in the past couple of months — the sector ETF XLK (NYSE Arca: XLK) is up less than 1 percent this quarter — Lee said historical patterns may hold optimistic signals.

"When you think about wage inflation, we have to go all the way back to the '50s to find a cycle led by wage inflation," Lee said. "Businesses in the '50s spent a lot of money on technology to offset wage inflation — I think it's going to be the same story — and so tech has a chance to really re-rate."

Looking to next year, he pointed out that the first half of 2017 could end up being "pretty treacherous." He noted that in the first half of a year with a new president, three quarters of the time, the market sees a drawdown of almost 10 percent.

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In terms of which sectors could see the biggest growth, Lee said that "banks have been doing nothing for 10 years," which could lead some investors to think that there's a lot of room for them to run.

He said he sees many of his clients looking back to the playbook of 2015, but he thinks its time to buy a completely new group of sectors, such as financials, energy, tech and materials.



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