Fundstrat
Fundstrat’s Tom Lee: Bold Market Views Through His Investing Principles
10/2/2025, 8:45:01 PM
Economic Summary
- US recession risk is muted because corporate borrowing is low, household debt-service ratio (~10% of disposable income) is well below past recession peaks (~14–16%), and corporate debt is often locked in at higher rates.
- The US economy is now more service- and wealth-driven (household net worth ~ $150T vs GDP ~$25T), which reduces manufacturing-driven boom-bust cycles and explains fewer broad recessions versus earlier decades.
- Current asset price records (stocks, homes, gold, crypto) do not automatically translate into consumer-price inflation because asset gains don't directly change expected prices for CPI-heavy items like cars and housing.
- Valuation metrics like PE or CAPE are residual and context-dependent; earnings growth, buybacks, policy, and new entrants can materially alter long-term returns, so single-metric conclusions (e.g., CAPE = low returns) can be misleading.
Bullish
- Small caps are derated and under-owned, could outperform next decade.
- A small allocation to Bitcoin/crypto has delivered outsized historical returns.
- Companies emerging from bankruptcy can come back stronger and be attractive.
Bearish
- High index concentration and CAPE-based arguments imply low long-term returns.
- Many small-cap companies are unprofitable or liquidity-constrained (biotech, regional banks).
- Regional banks and some cyclicals pressured by monetary policy.
- S&P concentrated leadership could be vulnerable if top firms falter.
Bullish tickers
BTCETHIWM
Bearish tickers
GSJPMGOOGLMETA
BTC
Bullish
Fundstrat recommends a long-term ~2% allocation; BTC rose historically from ~$1,000 to ~$70,000.
Bearish
Critics argue Bitcoin 'doesn't do anything' and remain skeptical of its fundamentals.
ETH
Bullish
Holding Ethereum alongside Bitcoin would have meaningfully amplified allocation returns without rebalancing.
Bearish
General crypto skepticism persists despite strong past returns.
IWM
Bullish
Small caps are deeply derated, under-owned, and could be the star of the next decade.
Bearish
Over 30% of Russell 2000 companies don't make money; many are biotech or weak regional firms.
GOOGL
Bullish
Tech winners (Google/Facebook era) show how new technologies and adoption can be underestimated initially.
Bearish
Large-tech concentration (MAG-7) trading at high multiples can make headline valuations look expensive.
META
Bullish
Platforms that capture young-user adoption (social, AI) can deliver outsized earnings growth over time.
Bearish
High multiples among top tech names contribute to concentration concerns.
GS
Bullish
No explicit bullish case in the discussion; referenced as author of a pessimistic long-term market view.
Bearish
Goldman's low-return forecast (3%/yr) highlights concerns over CAPE and index concentration.
JPM
Bullish
Mentioned historically as employer of the strategist; no direct bullish thesis presented.
Bearish
Regional banking and monetary-policy pressures can hurt parts of the financial sector.
People mentioned
Tom Lee