The Master Investor Podcast with Wilfred Frost

Episode: Tom Lee: A New 10 Year Bull Market Has Begun
Guest: Tom Lee, Co-Founder and Head of Research, Fundstrat Global Advisors
Date: August 28, 2025

Episode Overview

In this episode, Wilfred Frost interviews Tom Lee, renowned market strategist and co-founder of Fundstrat Global Advisors. The discussion centers around Tom's outlook for a new 10-year bull market stretching to 2035, his demographic-driven market theses, the launch and strategy behind his successful "Granny Shots" ETF, sector and stock-specific insights (with special attention to Palantir and JP Morgan), and the art of recognizing market tops and bottoms. Tom also reflects on lessons learned from his past calls and shares his core advice for investors.

Key Discussion Points & Insights

Tom Lee’s Bullish 10-Year Outlook (00:00, 06:27, 07:37)

• Main Thesis: Tom believes a new bull market has started and will likely run through 2035, driven heavily by demographic factors, innovation, and wealth transfer.

  “I think we are in a new bull market... 2035 sounds about right. That would be a 10-year bull run from here.”
  — Tom Lee (00:00, 06:27)

• Millennials and Gen Z: Tom explains that prime-age workforce growth, the wealth transfer from boomers to millennials/Gen Z, and exposure to new themes (AI, blockchain) are structural forces underpinning his thesis.

• Why Critics are Skeptical: The market has faced two 20% declines since 2020, causing many to underestimate the strength and resilience of the ongoing recovery.

The Power of Demographics Over Market Sentiment (03:34)

• Historical Pattern: Major bull and bear markets often coincide with generational peaks and troughs (e.g., boomers in ‘99, Gen X in 2018, millennials peaking in 2035).

  “Demographics really explains almost every bull market since 1890.”
  — Tom Lee (03:34)

• Investor Biases: Older cohorts hold the wealth and tend to be skeptical following periods of disruption, but youth drive changes and create outsized opportunity—something Tom actively surveys and factors into Fundstrat’s analysis.

The Role and Independence of the Federal Reserve (08:04, 10:16, 11:56)

• Tom stresses Fed independence as critical for market stability and warns that persistent interference would erode confidence.

  “The Fed is the single most powerful entity in the world… what the Fed says triggers an instant response across all markets…”
  — Tom Lee (08:04)

• Rising Yields and Market Impact: Rising rates are not linearly negative for equities. P/E multiples tend to rise along with yields until yields exceed 6%; above that, stocks become pressured.

  “Between 2 and 6%, higher yields are associated with rising P/E… But then after 6%, you start to really crowd up private sector's ability to out earn the cost of money.”
  — Tom Lee (10:32)

• US Debt Concerns: US debt is offset by vast national assets and continued dollar dominance; dire headlines do not reflect the full balance sheet reality.

The “Granny Shots” ETF (12:37–15:41)

• Overview: Launched in November 2024, the ETF has grown to $2.4 billion AUM and is designed around a “best ideas” list rooted in key secular themes.

  “We said that the S&P is essentially driven by a handful of companies tied to the most important themes… If a stock is included, it had to be tied to two themes because we figured two sails means that you can catch the wind from two different directions.”
  — Tom Lee (12:49)

• Performance: Outperforming the S&P YTD with ~18% returns, top 2 percentile in Morningstar's rankings among active large-cap funds.

• Constituents: Holds 30 equally weighted stocks including Google, Apple, Nvidia, Palantir, Microsoft, with exposure to financials and healthcare, not just the “Magnificent 7.”

  “It owns 30 stocks… equal weighted so it’s not benefiting just from owning the Mag 7… it has a lot of financials in it and has some healthcare. So it's really a diversified fund.”
  — Tom Lee (14:58)

Analysis of Palantir (16:01–18:08)

• Unique Model: Palantir is best described as “McKinsey plus the best software company”—they consult and build the solutions to transform entire businesses.

  “It's like McKinsey plus the best software company… if you think about it, they’re basically like a private equity company you can just hire to re-engineer your business. I think it's really pretty magical.”
  — Tom Lee (16:01–17:40)

• Valuation Skepticism: The market mislabels it as SaaS or consulting, suppressing its valuation multiples, but the actual synergy and impact are underestimated.

Bull Case for JP Morgan and Financials (18:08–20:49)

• Post-GFC Strength: Despite heavy regulation and economic headwinds, JP Morgan and Goldman have thrived—becoming nimble and testing earnings power.

• AI & Blockchain as Catalysts: AI will deepen client relationships and improve lending efficiencies; blockchain will drive radical cost reductions. Major cost reduction via employee reductions could lead to higher shareholder returns.

  “Banks know they can re-engineer their entire operations around AI and blockchain. JP Morgan could have more profits…”
  — Tom Lee (18:16–20:49)

Recognizing Market Tops and Tom’s Style (21:43–25:20)

• Ability to Call Tops: Tom recounts his cautionary experience during the dot-com bubble, refusing to back unsound IPOs and even issuing tough sell ratings under pressure.

  "In ’99, it was clear to me we were in a bubble. And ... I passed on so many deals ... So if someone's asking me, would I know what a top looks like? ... I avoided all of that carnage."
  — Tom Lee (21:43–23:49)

• The VIX Bottom Indicator: A VIX closing below 30 after being above 60 has always signaled a bottom.

  “Whenever the VIX has been above 60 and closes below 30, 100% of the time, that's been the bottom.”
  — Wilfred Frost / Tom Lee (24:47–25:09)

• No Reverse Signal for Tops: There is no equally reliable VIX signal for market tops; Tom looks for policy shocks (e.g., Fed tightening) or signs of rampant speculative excess.

Top Signals & Current Market Skepticism (25:57–28:10)

• What Can End the Bull Market: The end of the bull run will probably come via a policy shock (Fed tightening, perhaps sudden rate hikes or liquidity withdrawal) or an exogenous event (e.g., an enormous oil spike), combined with excess investor speculation—which Tom does not see yet.

  “There’s so many skeptics… They're immediately skeptical of everything we just said… so there's skepticism at these levels. That's not a top.”
  — Tom Lee (27:30)

• Leverage Watch: Margin debt and leverage would need to leap meaningfully to flash red; current readings are safe.

Notable Quotes & Memorable Moments

• On Demographics & Skepticism:
  “Most of the wealth in America is held by older people… but the world in disruption is caused by young people.” — Tom Lee (04:12)

• On Fed Independence:
  “Fed independence is really important because the Fed is the single most powerful entity in the world.” — Tom Lee (08:04)

• On Staying Invested:
  “The best investment I think that we've made is… keeping people in the game… once you sell something because it's a painful decline, you're so reluctant to get back in.” — Tom Lee (28:48)

Timestamps for Important Segments

• 00:00 – Opening thoughts: New bull market thesis
• 03:34 – Power of demographics in predicting markets
• 06:27 – Why this bull market will run until 2035
• 08:04 – The necessity of Fed independence; policy risk
• 10:16 – Debt concerns and US balance sheet
• 10:32 – Yields/PE ratios; at what point rates become bearish
• 12:37 – Introduction to the "Granny Shots" ETF
• 14:09 – ETF performance and themes
• 16:01 – Palantir investment case
• 18:08 – JP Morgan/banks and technology-driven reinvention
• 21:43 – Tom’s history calling tops/bubble caution
• 24:47 – VIX as a reliable market bottom indicator
• 25:57 – What would signal a market top
• 28:32 – Best and worst investment calls
• 31:02 – Tom’s core investment advice

Tom Lee’s Core Investment Advice

“When you're investing, you should really think of it more as you're buying companies, not just buying the stock market, because then you'll have a lot more conviction about what you own.”
— Tom Lee (31:02)

Tone & Style

Throughout the episode, Tom Lee is matter-of-fact, deeply analytical, and refreshingly honest about his track record, including past missteps. Wilfred Frost is engaging and occasionally self-deprecating, providing space for Tom’s nuance, backing up the discussion with real market history, and inviting actionable wisdom for listeners.

[This summary eliminates advertisements, intros, and outros, distilling the substance and style of the full conversation.]