Podcast Summary: The Master Investor Podcast with Wilfred Frost

Episode: Tom Lee: Bear Market Coming in 2026 – Use It As Buying Opportunity
Date: January 20, 2026
Host: Wilfred Frost
Guest: Tom Lee (Fundstrat Global Advisors, Bitmine Immersion, Grannyshots ETF)
Duration: ~49 minutes

Episode Overview

This episode features renowned strategist Tom Lee sharing his 2026 market outlook and key long-term investment themes. Lee predicts a significant market pullback (potential bear market) in 2026, yet frames it as a buying opportunity rather than a reason to panic. Across the conversation, he discusses macroeconomic transitions (Fed changes, geopolitical risk, AI pricing), sector allocations (energy, basic materials, Mag 7), gold and crypto adoption, and his investment philosophy of long-term conviction over market timing. He also delves into the success of his Grannyshots ETF, and fascinating new moves in crypto, including Bitmine’s moonshot investment in MrBeast’s Beast Industries.

Key Discussion Points & Insights

1. 2026 Market Outlook: Bull, Bear, or Both?

• Short-Term Pullback, Long-Term Opportunity:
  Lee forecasts a robust start to 2026 followed by a notable market correction, possibly resembling a bear market, then a strong finish to the year as the bull market resumes.

  "When we look back at the end of this year...2026 will look like a continuation of the bull market that started in 2022..." [03:53]

• Factors Driving Uncertainty:

  • Transition at the Fed – A new chair and potential market test of their resolve.
  • White House's role – More pronounced policy decisions picking sectoral winners and losers.
  • AI Hype – Uncertainty over how much growth is priced in and the energy required for AI's expansion.

  "Maybe three. One is, of course, a new Fed... The White House is going to be more deliberate in picking winners and losers... the market is still trying to understand how much is priced into AI." [03:53]

• Expected Pullback Scale:
  Lee estimates the market could correct by 10-20%, potentially feeling like a bear market, but ultimately being a round-trip before a late-year recovery.

  “It could be 10...it could be 15, it could be 20. But something that maybe brings us to a round trip from the start of the year.” [05:44]

2. Long-Term Bull Thesis Remains Firm

• Demographic and Innovation Tailwinds:
  US enjoys a growing prime-age workforce, massive generational wealth transfer, and leadership in tech/AI/blockchain.

  “The US does have a favorable demographic tailwind...AI...evidence that we could be moving towards superintelligence is accelerating...Blockchain...the banking industry is starting to embrace the efficiency of blockchain.” [07:05]

• Lessons on Market Timing:
  Trying to time the market is futile and detrimental.

  “Trying to time the market makes you an enemy of your future performance...the only people who really make money are those who are investing for the long term.” [00:00], [46:00]

3. Sectors and Asset Classes: Where Lee Sees Opportunity

• Stay with the Mag 7, but Energy & Materials Lead for 2026:
  He maintains conviction in mega-cap tech’s earnings power but prefers energy and basic materials as top picks, citing mean reversion and strong macro tailwinds.

  “We still like the Mag 7...our top sector pick is energy and basic materials—gold should be sitting in a portfolio.” [00:37], [15:13]

• Energy:
  Bullish on energy equities despite short-term oil price doldrums, citing structural demand from data centers, geopolitical shifts, and the decoupling from crude prices.

  “I've learned oil prices and energy stocks don't correlate...everything from data centers and this shift away from alternatives is going to be putting upside into the future prices of oil." [16:21]

• Materials:
  Optimistic about gold, silver, and copper, linking copper especially to economic recoveries.

  “Gold has made a big move, but it's going to be silver and copper that have good years...copper has upside, I think it leads the basic materials stocks higher.” [17:16]

• Financials:
  Banks are benefiting from tech and AI adoption, likely to be re-rated (valued) more like tech companies in the future.

  “Banks can reduce their reliance on employees...their margins go up and...their earnings drops. They're going to get re-rated more like technology stocks.” [18:00]

• Cyclicals & Small Caps:
  Lee argues for small and mid-cap outperformance over the coming years, with the underperformance cycle looking exhausted.

  “I think that small mid-caps have underperformed for so long...there could be a five or six year cycle of small cap outperformance.” [26:40]

4. AI & MegaCaps: Winner-Take-All Dynamics

• Most AI Stocks Will Falter:
  Only 10% of AI-related stocks are likely to be solid investments, but the winners will deliver outsized returns, mimicking early Internet winners.

  “Only 10% of the AI stocks will turn out to be a good investment over the next decade...but the winning investments more than make up for it.” [19:40]

• Mega Caps as Modern “Staples":
  Companies like Apple, Nvidia can maintain premium multipliers even as growth slows, similar to what Warren Buffett saw in Apple.

  “People look at Nvidia as a cyclical hardware company...Nvidia...has high visibility on future earnings and yet trades at half the multiple of Costco. There's a lot of room to re rate those stocks higher.” [22:28]

5. Macro Risks: Fed, Trade Wars, and Geopolitics

• Fed Dynamics:
  Lee expects easing, with market benefit, seeing housing cost-induced inflation as transitory.

  “Underlying inflation is actually much lower than the printed...truflation...showing 1.8...[Fed cuts] can ease burdens on a lot of Americans.” [13:42]

• Trade and Tariffs:
  While headline risks remain, Lee argues the market will absorb shocks better than in prior cycles.

  “This year markets are going to be a little more measured.” [10:53]

6. Gold & Crypto: Store of Value Face-Off

• Gold’s Renaissance:
  Gold benefits from both visible factors (geopolitical, central bank buying) and invisible ones—Lee believes Tether, the stablecoin, has been a massive new buyer, plus generational shifts in preferences.

  “Tether...has become the largest private buyer of gold... renewed interest in gold among Millennials, like what their grandparents liked.” [27:47]

  • Gold is a Currency, Not a Commodity:

    “Gold doesn't make sense if you're trying to view it as a commodity...it acts, like you said, an alternative to the dollar, which means maybe we should view it as a dollar alternative…” [30:56]

  • Allocation Advice:

    "I've seen folks like Ray Dalio recommend up to 10%. Okay, so let's say it's 15. Most people are at 0 for gold. So that means gold is still under owned today." [32:05 / 32:18]

• Crypto’s 2025-26 Story:

  • Crypto Pulled Down by Deleveraging:
    The October 10, 2025 bitcoin crash was the largest wipeout of leverage in crypto history, decoupling bitcoin/ethereum from gold.

    "On October 10th was the single largest deleveraging event in the history of crypto...Crypto has periodic deleveraging events..." [32:59]

  • Bitcoin as Digital Gold, Adoption Hurdles:
    While Lee insists bitcoin is digital gold, the adoption base is smaller and bumpier. New highs in 2026 would signal the deleveraging is over.

    "It's bitcoin is digital gold. But the universe of people that believe that thesis is not the same universe that owns gold." [34:20]

  • Bitcoin Price Target:

    “We think Bitcoin will make a new high this year...price target for Bitcoin this year is 250,000.” [01:45] [35:01]

  • The Case for Ethereum:
    Lee sees Ethereum’s dominance rising as Wall Street ramps up tokenization—potential price if ratio returns to 2021: ETH ≈ $12,000 if BTC = $250,000.

    "Ethereum's price ratio to Bitcoin is...below where it was in 2021...If Ethereum's price ratio recovers...and Bitcoin goes to 250...Ethereum would be around 12,000 and Ethereum's around 3,000 today." [36:41]

7. New Frontiers: Bitmine, MrBeast, and Financial Literacy

• Grannyshots ETF Rapid Growth:
  Grannyshots ETF (and its offshoots: GrannyJ, income-focused Granny) grows from $2B to $4.7B AUM, with small and midcap focus added.

  "In total, 4.7 billion across the three [ETFs]." [25:48]

• Bitmine’s “Moonshot” in MrBeast’s Beast Industries:
  Ethereum treasury company Bitmine invests $200M in Beast Industries, aligning with MrBeast’s global reach and vision for future financial products and, crucially, financial literacy outreach.

  “Beast Games...is watched by over 250 million viewers monthly...They are very selective on who is on their cap table...Bitmine will be the largest corporate investor...” [39:13–40:26]

  • Future of Financial Services:

    "There's a future Beast Financial Services...if you have a billion followers, how do you productize the business further?...financial education is one of the biggest vacuums out there...it's natural that Mr. Beast could be one of the people leading financial education." [41:20–42:41]

  • Strategic Rationale:

    "Bitmine had from day zero said that about 5% of its balance sheet would be allocated to moonshots...I think Beast Industries as an investment is going to be very profitable...by securing a potential organic collaboration with Mr. Beast, I think it's going to strengthen the future of Ethereum." [44:15]

8. Final Advice & Notable Quotes

• On Market Timing:

  “Trying to time the market makes you an enemy of your future performance...view the pullback as a chance to buy, not...to sell.” [00:00], [46:00]

• On Crypto Skeptics:

  “Crypto is being adopted by the younger generations...no different than in 1995 when Bill Gates was on Letterman talking about the Internet...that’s what's happening with crypto today.” [47:14]

• How to Invest in Crypto:

  “I would only buy the crypto that have been around, so Bitcoin and Ethereum...Bitmine is acting as not only a settlement layer for the industry, but...becoming a financial services company.” [48:20]

Notable Quotes & Memorable Moments (with Timestamps)

• Market Timing:
  “Trying to time the market makes you an enemy of your future performance.” – Tom Lee [00:00], [46:00]
• "Every pullback has been a great opportunity." – Tom Lee [06:21]
• "Markets peak on good news somewhat counterintuitively." – Wilfred Frost [08:26]
• "Only 10% of AI stocks will turn out to be a good investment over the next decade...but the winning investments more than make up for it." – Tom Lee [19:40]
• “Nvidia...trades at half the multiple of Costco. I think there’s a lot of room to re rate those stocks higher.” – Tom Lee [22:28]
• “Tether...the largest private buyer of gold.” – Tom Lee [27:47]
• “Crypto...the only people who really make money are those who are investing for the long term.” – Tom Lee [00:00], [46:00]
• “Grannyshots ETF...is now at $4 billion AUM. Extraordinary success.” – Wilfred Frost [01:56]
• “The banks have invested so much in tech and into AI that they are really big beneficiaries of that super intelligence coming.” – Tom Lee [18:00]
• “If Ethereum’s price ratio [to BTC] recovers to the 2021 highs and Bitcoin goes to 250, [ETH] would be around 12,000 and Ethereum’s around 3,000 today.” – Tom Lee [36:41]
• “MrBeast...more viewership than the Super Bowl...equivalent of two Super Bowls of viewership every month.” – Tom Lee [39:31]

Timestamps of Key Segments

• 2026 Market Outlook & Risks: [03:53]–[06:21]
• Drivers of the Bull Market & Demographics: [06:45]–[08:26]
• Fed, Inflation, and Trade Outlook: [10:53]–[13:42]
• Sector Positioning (Mag 7, Energy, Materials): [15:13]–[18:00]
• AI & Mega Cap Tech Analysis: [19:40]–[24:03]
• ETF/Grannyshots Performance and Philosophy: [25:48]–[27:42]
• Gold Use Case, Generations, and Allocation: [27:47]–[32:18]
• Crypto (Deleveraging, Digital Gold, Predictions): [32:54]–[36:41]
• Bitmine Investment in MrBeast/Beast Industries: [38:12]–[45:35]
• Final Advice & Investment Philosophy: [46:00]–[49:01]

Final Investment Takeaways

• Stay invested for the long term, avoid trying to time market bottoms and tops.
• Use market pullbacks—especially potentially severe ones—as buying opportunities.
• Diversify: Hold exposure to dominant mega-cap techs (Mag 7), but lean into energy and materials, especially gold, silver, and copper.
• Don’t ignore crypto or gold in your allocation; both are under-owned relative to their potential global roles as stores of value.
• Skeptics of new technology: don’t repeat the Internet-skeptic mistake—crypto and blockchain’s future adoption trajectory is real and driven by younger generations.

For deeper explanations, analysis, or to take action on the themes discussed, listeners are encouraged to revisit timestamped sections above or seek additional supporting materials as referenced during the discussion.