Tom Lee’s Bullish Outlook and the New Bull Market Narrative
Introduction: A Bold Prediction for a Decade-Long Bull Run
Welcome, listeners, to another deep dive into the ever-evolving world of markets and technology on our podcast. Today, we’re unpacking a fascinating conversation from the Master Investor podcast, where host Wilfred Frost sat down with Tom Lee, co-founder of Fundstrat Global Advisers and a renowned market strategist. Lee, known for his bold and often accurate market calls over the past decade, has declared that we are at the dawn of a new bull market, potentially lasting until 2035. This is a 10-year horizon of growth, underpinned by demographic trends, technological innovation, and structural shifts in the U.S. economy. But what does this mean for investors, and what are the risks and opportunities in this optimistic outlook? Let’s dive into the details with historical context, sector-specific impacts, and actionable advice.
Tom Lee’s track record speaks for itself. As JP Morgan’s chief global strategist until 2014, and now at Fundstrat, he has consistently been bullish since the post-2009 recovery, guiding investors through dips and crises with calls that have often proven prescient. His latest prediction of a bull market stretching to 2035 is rooted in demographic analysis, a cornerstone of his methodology. He ties market tops to generational peaks—think Baby Boomers in 1999 or Gen X in 2018—and sees Millennials peaking in 2035 as the next major waypoint. Add to this the rise of Gen Z, wealth inheritance, and U.S.-centric innovations in AI and blockchain, and Lee paints a compelling picture of sustained growth. But as we’ve seen in market history, optimism must be tempered with caution. Let’s explore the broader implications.
Market Impact: A New Bull Market Amidst Disruption
The idea of a new bull market isn’t without precedent, but its timing and context are unique. Lee acknowledges that since the 2020 lows, we’ve seen a disrupted recovery with two 20% declines, including a wipeout earlier this year. Yet, he argues we’re still early in this cycle. Historically, bull markets have often followed deep crises—think the post-1929 recovery or the rebound after the 1973-74 bear market. The S&P 500, for instance, rose over 400% from 1982 to 2000 during one of the longest bull runs, driven by technological shifts and demographic tailwinds. Lee’s thesis echoes this, pointing to Millennials and Gen Z entering their prime earning years, inheriting trillions, and shifting wealth into equities over bonds.
Globally, this bullish outlook could have significant ripple effects. If the U.S. maintains its dominance in AI and blockchain—sectors Lee sees as transformative—it could widen the gap with other economies, particularly in Europe and emerging markets still grappling with post-pandemic recovery and geopolitical tensions. However, risks loom large. Lee highlights Fed independence as critical, given the central bank’s outsized influence on global markets. Any political interference, as hinted at in recent discourse, could trigger volatility. Moreover, U.S. debt-to-GDP concerns persist, though Lee counters that the nation’s undervalued assets (like national parks and gold holdings) and dollar dominance mitigate immediate threats. Still, history reminds us of the 1987 crash, where policy missteps exacerbated market fragility. Could similar shocks derail this bull run?
Sector Analysis: Where the Growth Lies
Lee’s sector picks provide a roadmap for where he sees the most potential. He’s particularly excited about financials, predicting they could grow to 40% of the S&P 500, driven by AI and blockchain efficiencies. Take JP Morgan, a stock in his Granny Shots ETF (GRNY), which has already amassed $2.4 billion in AUM since its November launch. Lee argues that banks, battle-tested by post-GFC regulations and recent inflationary pressures, are poised to leverage technology to cut costs (like employee overhead) and enhance profitability. This mirrors the 1990s, when financials rode the wave of globalization and tech adoption to outsized gains.
Healthcare is another sector Lee flags for growth, likely tied to aging demographics and innovation in biotech. But it’s tech—specifically AI and blockchain—that underpins his thesis. Companies like Palantir, also in his ETF, embody this synergy. Despite high valuations, Lee sees Palantir as a transformative force, combining consulting and software to re-engineer businesses. This isn’t unlike the early days of Apple or Tesla, where skeptics fixated on multiples missed the broader disruption. If Lee is right, tech could continue to dominate, much as it did in the post-2009 bull market, where the FAANG stocks drove over 30% of S&P gains by 2020.
However, not all sectors may thrive. Energy, for instance, could face headwinds if oil spikes to levels ($400/barrel, per Lee) that burden households, reminiscent of the 1970s oil shocks that triggered stagflation. Retail and consumer discretionary might also lag if inflation persists, squeezing disposable income despite demographic growth. Investors must weigh these disparities carefully.
Investor Advice: Building Conviction in a Bullish Era
For our listeners looking to navigate this potential bull market, Tom Lee offers a profound piece of advice: think of investing as buying companies, not just the stock market. This mindset fosters conviction, helping you weather volatility. If you believe in Tesla’s innovation or Palantir’s disruption, short-term noise like tariffs or Fed hikes becomes less daunting. Historically, this approach paid off for legends like Warren Buffett, who focused on business fundamentals over market sentiment during the 1980s and 1990s bull runs.
Practically, consider diversifying across Lee’s favored sectors—financials, tech, and healthcare. His Granny Shots ETF, up 18% year-to-date and outperforming the S&P 500, offers a curated exposure to 30 equal-weighted stocks tied to major themes like AI and cybersecurity. For those wary of active funds, broad-based ETFs like the S&P 500 (SPY) still capture much of this growth, though with less focus. Be mindful of valuation risks in tech; history shows bubbles like 1999 can form when speculation outpaces fundamentals. Lee himself admits to recognizing tops, as he did in 1999 by avoiding overvalued IPOs, so watch for excess margin debt or policy shocks as warning signs.
On timing, Lee’s VIX signal—when it spikes above 60 and closes below 30, it’s historically a bottom 100% of the time—can guide entry points after pullbacks. While he lacks a reverse signal for tops, policy shocks (like Fed tightening) or commodity spikes are red flags. For now, his 2035 horizon suggests staying invested, but keep cash reserves for opportunistic buys during inevitable corrections, as we saw in 2020 and 2022.
Conclusion: Balancing Optimism with Vigilance
As we wrap up, Tom Lee’s prediction of a decade-long bull market is both exhilarating and sobering. His evidence-based approach, rooted in demographics and historical cycles, offers a compelling case for sustained growth, especially in tech and financials. Yet, history—from the 1987 crash to the dot-com bust—teaches us that no bull run is without turbulence. Global risks like Fed interference, debt burdens, or geopolitical shocks could test this outlook, while sector disparities mean not all boats will rise.
For you, our listeners, the takeaway is clear: embrace the potential of this bull market by focusing on companies you believe in, diversifying across growth sectors, and staying vigilant for warning signs. Whether it’s 2035 or sooner, the end will come, and preparation is key. Join us next time as we continue to dissect the trends shaping our financial future. Until then, invest with conviction, stay informed, and keep your eyes on the horizon. Thanks for tuning in!