The stock market will rise regardless of who wins the election as sidelined investors start buying again, Fundstrat’s Tom Lee says

• Investors who have been on the sidelines because of Tuesday’s Presidential Election will buy stocks and push the market higher as the uncertainty subsides, Fundstrat’s Tom Lee said on Tuesday.
• “Investors have been on a buyers strike due to the uncertainty of election outcomes,” Lee said.
• That buyers strike will likely vanish this week and stocks will go up regardless of the outcome of the Presidential election, even in the scenario of contested results, according to Lee.
• Visit Business Insider’s homepage for more stories.

Anxiety about the 2020 US presidential election that’s left some investors on the sidelines is finally set to end, helping push markets higher through the end of the year, according to a Tuesday note from Fundstrat’s Tom Lee.

Since October 12, stocks have staged a near 10% correction as rising COVID-19 cases, a lack of another fiscal stimulus deal, and election anxiety pushed some investors to the sidelines.

“Investors have been on a buyers strike due to the uncertainty of election outcomes,” Lee said.

But that strike’s set to end as Tuesday’s election will reduce market uncertainty, according to Lee. And investors have plenty of cash sitting on the sidelines to put to work in the markets, nearly $4.5 trillion, Lee highlighted citing data from ICI.

All of this sets the stock market up for a post-election rally, regardless of the outcome.

Read more: From flipping burgers at McDonald’s to a self-made multimillionaire: Here’s how Willie Mandrell leveraged a simple real-estate investing strategy to acquire 40 units and achieve financial freedom.

Specifically, Lee expects a 10% rally if Biden wins, with cyclical stocks leading and tech stocks lagging due to tax risk.

If Trump stages a surprise victory, however, Lee expects a 15% to 17% rally, which is higher than a potential Biden win due to a lower threat of more lockdowns to quell the rise in virus cases. Additionally, a Trump victory would result in both cyclical and technology stocks leading the market higher, Lee said. 

And if there’s a contested outcome, though this would be a negative outcome according to Lee, it would still result in a 5% to 7% rally in stocks thanks to increased stimulus odds and more easy monetary policies from the Fed.

The best stocks to be on in a post-election rally? Cyclicals, Lee concluded, citing tailwinds including fiscal stimulus, an easy Fed, a vaccine/cure to COVID-19, and improving manufacturing data.

Read more: Stifel asked its analysts to identify stocks most likely to be positively or negatively affected by the election results. Here are the dozens of stocks to buy or avoid in each of the 3 outcomes.