- Fundstrat’s Tom Lee predicts the S&P 500 will surpass 15,000 by 2030.
- Demographic trends, millennial spending habits, and technological advancements will be the main drivers.
- Below are four charts that show why Lee is bullish on the stock market.
Fundstrat’s Tom Lee caught people’s attention last month when he made an extremely bullish prediction that the S&P 500 would nearly triple by 2030.
In an interview with Bloomberg’s Odd Lot, Lee said he expects the S&P 500 to surpass 15,000 in 10 years. The index was trading at about 5,630 on Friday.
“If this is a normal S&P cycle that follows demographics, the S&P could reach 15,000 by the end of the decade. In my opinion, if you look at a longer time frame, we’re probably headed there,” Lee said.
In an interview, Lee said he sees several charts that support his bullish long-term prediction.
Here are four charts Lee shared with Business Insider that show why the naturally optimistic forecaster is bullish on the stock market.
1. Thank you millennials
Fundstrat
Lee created the above graph a few years ago, but his point remains: the average age of millennials is now about 31, and the 2.5 billion people worldwide are just starting to hit their prime years between the ages of 30 and 50.
“This is the third time we’ve entered a cycle where stocks have seen compound annualized returns in the high teens. We had the Roaring Twenties, we had the ’50s and the late ’60s, and this is the third cycle,” Lee told CNBC last month.
“All of this coincides with a surge in the 30-50 age group — prime-age adults — this time driven by millennials and Gen Z.”
“It’s about demand. According to the Urban Institute, when people reach their prime years, between 30 and 50, they start taking on more debt and making bigger life decisions. This is what drives the economy.”
2. Stock Market Peaks and Demographics
Fundstrat
Historically, the stock market has peaked at roughly the same time as the population reaches its prime, around age 50, as people approach retirement and often cut back on their spending.
For example, when the Greatest Generation peaked in 1930, it coincided with a multi-year stock market bear market.
Fast forward to 1974, and the Silent Generation was at its height, coinciding with a painful stock market correction of about 35% that lasted several years.
And the baby boomer generation was at its busiest in 1999, just a year before stocks suffered a multi-year bear market.
According to Lee, the average millennial won’t be in their prime until 2038, suggesting the stock market has plenty of room to rise until then.
3. Technology will address the global labor shortage
Fundstrat
According to Li, technology spending will surge in the coming years as labor shortages worsen around the world.
“AI is creating a global digital workforce supply because of the global labor shortage, and that creates a tremendous opportunity for U.S. technology companies. I think those two forces combined have created very favorable stock price-earnings multiples over almost a decade,” Lee said.
“I think we’re going to see a lot of money going into U.S. tech products because there’s going to be a shortfall of 80 million workers in the world by the end of the century. That means roughly $3 trillion of workers’ payrolls will be turned into silicon. That means U.S. silicon and AI suppliers are going to realize a $3 trillion profit margin.”
4. Money will flow into US tech stocks
Fundstrat
The technology sector will account for 50% of the S&P 500 as more companies spend trillions of dollars on technology to address global labor shortages.
The information technology sector currently accounts for around 30% of the index.
“If U.S. companies are growing profits at this rate, U.S. price-earnings multiples should rise. Capital will flow into the U.S. And where are the best and most important technology companies in the world? They’re basically all in the U.S.,” Lee said.
