Podcast Summary: The Compound and Friends

Episode: Tom Lee Says It's Still Early
Date: August 22, 2025
Hosts: Downtown Josh Brown (A), Michael Batnick (C)
Guest: Tom Lee, CIO & Portfolio Manager at Fundstrat Global Advisors (B)

Overview

This episode welcomes back Tom Lee for an in-depth conversation about today’s market dynamics and why he believes “it’s still early” in the current bull cycle. The conversation weaves through the resilience of the equities market, the evolving landscape for banks and crypto, the divisiveness of recent market rallies, and Tom’s hands-on role in Bitmine’s Ethereum treasury strategy. The group also dives into sector dispersion, future drivers of bull markets, labor market trends, and the concept of mean reversion in today’s corporate landscape.

Key Discussion Points & Insights

1. Tom Lee’s Market Reputation and Longevity

• Hosts praise Tom’s forecasting accuracy and willingness to maintain a bullish view even under criticism, especially post-2011:
  • “What's more impressive than your record ... is how much shit that you've had to put up with along the way.” – Josh Brown (09:33)
  • Tom highlights the challenge of being “right” in a field where only the next call matters and past wins are quickly forgotten. (12:13)
• Quote:
  • “It's our next call that matters, not our previous set of calls.” – Tom Lee (12:31)

2. Bull Market Resilience & Waterfall Declines

• Tom explains market recoveries are typically V-shaped unless a recession intervenes, countering popular narratives:
  • “We've showed that basically, unless there's a recession, it's always a symmetric balance … the ratio's like 1.4 to 1.7.” – Tom Lee (14:19)
• 2025’s 20% market drop was strong and fast, and the subsequent recovery was equally swift, suggesting ongoing bull market momentum.
• Quote:
  • “If you had a fact pattern of two 20% gains and then the third year's up 10 already ... you have confirmation that it's a bull market.” – Tom Lee (17:31)

3. The “Most Hated” Rally and Investor Psychology

• Discussion on why every big rally is “the most hated,” focusing on missed opportunities, fear of buying after sharp runs, and generational divides.
  • “People don't operate with independence. … When something bounces, it's just dumb people buying and that prevents them from jumping on.” – Tom Lee (19:11)
• Many investors persistently anticipate another crash and miss substantial upward moves.

4. Valuation Debates and the False “Seven Stock Market” Narrative

• Pushback against the idea that only a handful of megacaps are driving the market:
  • “When people say there's only seven stocks going up, I think it's a false portrayal of the stock market.” – Tom Lee (23:06)
• Equal-weight S&P valuations remain within long-term norms; stock market return breadth is wider than many believe.

5. AI and Market Leadership

• Tom’s perspective: AI is the main current theme, but singular drivers are routine across history:
  • “A theme driving the global economy has been systematic since capitalism.” – Tom Lee (25:21)
  • Expanding on AI’s effect: “It’s only a bubble if spending is not driving income growth ... and we have margins expanding, so it’s not even late cycle for AI.” (25:57)

6. Rotation and Breadth: Where Does the Next Bull Leg Come From?

• Signs the bull market could broaden beyond megacap AI winners if the Fed cuts rates or ISM manufacturing data improves.
• The dispersion between tech sub-sectors (semiconductors vs. software) is high; AI’s disruptive effects create new winners and losers.
  • “This should be a good stock picking environment.” – Tom Lee (27:09)
• On agentic AI and corporate efficiency: Tom shares practical examples of AI-driven improvement within both Funstrat and corporate America (31:08–33:09).

7. Profit Margins and the “Mean Reversion” Fallacy

• Highlights that high corporate margins stubbornly defy mean reversion, primarily due to evolving company quality and index composition.
  • “Mean reversion is too commonly used a word. ... In the equity world, there's no such a mean reversion. There's winners and losers.” – Tom Lee (36:46)

8. Macro & The Economy: ISM, Labor, Fed Policy

• ISM manufacturing has been below 50 for a historically long stretch, indicating caution but also a potential “coiled spring” for future expansion.
  • “You never had a cycle peak when you've had ISM below [50].” – Tom Lee (38:16)
• Labor market concern: College grads are struggling to find jobs, possibly due to AI’s disruption or a misaligned labor pipeline.
  • “There's no linear careers anymore ... AI means there's a huge mismatch.” – Tom Lee (45:31)
• The team debates the effectiveness and accuracy of BLS data vs. other measures (cell phone data, ADP payrolls), and discuss rate cuts and policy expectations ahead of Powell’s Jackson Hole speech.

9. Crypto, Treasury Companies, and the Bitmine Model

• Crypto remains a generational asset; adoption divides persist:
  • “We know crypto is a generational divide ... it’s people in their 20s and 30s driving all future change.” – Tom Lee (54:10)
• Tom outlines Bitmine Immersion's Ethereum treasury strategy:
  • Bitmine switched from capital-intensive BTC mining to an asset-light model, accumulating Ethereum using only equity financing—no leverage.
  • “The only debt on Bitmine’s company is a $1 million loan ... it’s literally straight clean equity.” – Tom Lee (60:20)
  • Yield from staking ETH could facilitate shareholder rewards and buybacks.
  • The company is now highly liquid and one of the ten most traded US stocks by volume (69:02).
• Per Tom, rumors about systemic leverage risks in this ETH strategy are incorrect.

10. Granny Shots ETF Success

• Tom’s thematic “Granny Shots” ETF (ticker: GRNY) has achieved $2.28B in assets since its November 2024 launch.
  • The portfolio blends long-term themes (AI, demographics, seasonality) and has outperformed peer funds.
  • “We're just trying to find you the best sort of important theme drivers in the market.” – Tom Lee (77:03)

Notable Quotes & Memorable Moments

• On the evolution of banking and tech multiples:
  • “The financial industry could start to be trading like a tech sector multiple.” – Tom Lee (03:09)
• On investor bias during rallies:
  • “People don’t study history. They study their own sensibilities.” – Tom Lee (14:45)
• On AI as a market driver:
  • “AI is the most important driver of the global economy.” – Tom Lee (25:01)
• On efficiency and AI disrupting labor and traditional business:
  • “[Palantir] eliminates grifting in your business model.” – Tom Lee (33:47)
• On mean reversion and index quality:
  • “Companies of 2025 are better than companies of 2015 and way better than companies of 1985.” – Josh Brown (36:32)

Timestamps of Key Segments

• 00:35–01:38: Bitmine background and strategic shift
• 09:33–12:48: Tom Lee’s forecasting track record
• 13:37–14:45: V-shaped recoveries and market symmetry
• 17:13–23:14: Market resilience, valuation, and the “seven stocks” debate
• 25:01–25:57: AI’s centrality and historical context of single-theme markets
• 27:09–33:09: Sector dispersion, agentic AI, and real-world corporate cases
• 36:46–37:14: Mean reversion myth and index evolution
• 38:16–41:22: ISM below 50—why caution may be bullish
• 45:31–47:05: College grad job market and the evolving labor landscape
• 54:10–57:09: Crypto adoption divides and generational dynamics
• 58:17–62:12: Bitmine’s equity-only Ethereum strategy and staking yield
• 69:02–70:13: Bitmine’s trading volume/liquidity edge
• 71:34–74:21: Granny Shots ETF, its themes, and construction

Closing and Personal Notes

• Tom Lee shares upcoming travel to the Frieze Art Festival in Seoul and excitement for the Future Proof conference in Huntington Beach (77:14–78:48).
• The episode closes with candid banter, movie recommendations, and a special offer for Compound listeners: 30-day free trial of Fundstrat research (80:15–81:17).

For Listeners Who Want to Dive Deeper:

• Tom Lee’s analysis blends quantitative rigor with historical perspective, consistently arguing that American corporate dynamism and technological adaptation are underappreciated.
• Both bulls and skeptics will find food for thought in his view of broad, durable market forces and the perils of missing out due to psychological and generational barriers.

Fundstrat Promo for Listeners
A 30-day free trial is mentioned: fundstrat.com/tom (81:00)

Note: Timestamps are in MM:SS as per the provided transcript, skipping sponsor messages and disclosures.