Video:Fundstrat
Compiled/organized: Yulya, PANews
At a time when most analysts are cautious and even pessimistic about the market, Mr. Bitmine’s senior strategist, Tom Lee, has made quite a difference. In this interview with Fundstrat, Tom Lee explored in depth the current macro cycle, the AI supercycle, changes in market sentiment, inflation risks and future trends in encrypted assets. Tom Lee thinks:Markets are at “ supercycle ” key nodes, and investors ' miscalculation of macro signals, yield curves, inflation logic and AI industry cycles is leading to systemic mismatches. He not only projected the end-of-year movement of US stock at 7,000 to 7,500 points, but also pointed to the prospect of a strong rebound of Ether and Bitcoin。The dialogue was edited by PaNews。
we're in the middle of a misunderstood “ supercycle ”
Moderator:Tom, you're welcome. Let us recall that over the past three years, the market has risen by more than 80 per cent. And you've been a few of the voices that insist on looking up. In your opinion, from 2023 to 2024, and even this year, what is wrong with 90 per cent of the analysts and the viewers
Tom Lee:eighty per cent of transactions depend essentially on the macro environment. over the past three years, investors have almost all viewed themselves as “ macro traders &rdquao; but they have made two key mistakes。
- First of allthey are too superstitious about the &ldquao; scientific &rdqua。When the yield curve is upside down, everyone sees it as a sign of recession. But we explained in Fundstrat that the reversal was due to inflation expectations — — because short-term inflation is high, short-term nominal interest rates should be higher, but lower in the long run, which is why the curve is upside down。
- Secondly, our generation has never really experienced inflation, so..everyone uses &ldquao in the 1970s; stagnating &rdquao; as a templateBut we are not aware that today we do not have the thorny conditions to create that kind of persistent inflation。
as a result, people are structurally empty, and they think &ldquao; the upside-down of the curve means recession, and stagnating is imminent &rdquao。They're missing out on the real-time, dynamic adaptation of business modelsIn response to inflation and the Fed ' s austerity policy, good profits were eventually delivered. In the stock market, time is the best friend of a great enterprise and the worst enemy of a mediocre enterprise, whether in inflation or cattle markets。
Moderator:I note that you think that the current market environment is somewhat similar to that of 2022, when almost everyone was turning blind, and now that the market is re-emerging with anxiety, you are once again standing up. What do you think is the biggest misconception about the current market pattern
Tom Lee:I think..the hardest to understand and grasp is “ supercycle ”I don't know. We turned structurally into an increase in 2009 because our cyclical studies show that a long-term cattle market is beginning. And in 2018, we identified two future supercycles:
- Millennium GenerationThey are entering the working age of gold, which will be a powerful wind for the next 20 years。
- Global gold-age labour shortageTHIS MAY SOUND FLAT, BUT IT'S THE SAME FACTOR THAT LAID THE FOUNDATIONS FOR AI'S PROSPERITY。
WHY IS THERE A DIFFERENCE BETWEEN THE AI BOOM AND THE INTERNET BUBBLE
Tom Lee:WE ARE IN AN AI-DRIVEN BOOM THAT HAS LED TO RISING ASSET PRICES. THIS IS A TEXTBOOK CASE: BETWEEN 1991 AND 1999, THERE WAS A SHORTAGE OF LABOUR AND A BOOM IN SCIENCE AND TECHNOLOGY; BETWEEN 1948 AND 1967, THERE WAS ALSO A SHORTAGE OF LABOUR AND A BOOM IN SCIENCE AND TECHNOLOGY. TODAY, THE AI WAVE IS REPEATING THIS PATTERN。
The problem, however, is that many consider the shares of the High Sharp ratio to be bubbles and try to be empty such as Nvidia, but this perception may be biased. They forgotToday's AI industry is completely different from the Internet in the 1990s. The Internet was only &ldquao; capital expenditure boom &rdquao; and AI was &ldquao; functional gain &rdquao;gain of funcing。
Moderator:Many compared the current AI boom to the Internet bubble of the late 1990s, even comparing Nvidia to Cisco. You've been there yourself. What difference does it make
Tom Lee:The comparison is interesting, but there are fundamental errors. Telecommunications capital expenditure (Cisco) and GPU (Nvidia) have completely different life cycles。
It was forgotten that, in the late 1990s, the core of the boom in capital spending was telecommunications — — and fibre-optic laying, not the Internet itself. At that time, telecommunications expenditures in emerging markets were linked to GDP growth, a boom that spread to the United States, leading companies such as Quest to spread fibre-optics by rail and on the streets, and Global Crossing to lay submarine cables globally. The problem is that the rate of consumption of these fibres by the Internet is far from the rate at which they are laidat the peak, almost 99 per cent of fibre-optics were idle &ldquao; dark &rdquao。
Today the opposite is true. The market demand for the Nvidia chip continues to be strong, with the current use of the GPU reaching almost 100 per cent, i.e. on-site, fully meeting market demand. The supply of Nvidia chips is far from meeting demand, and even if production capacity increases by 50 per cent, all chips will be sold out quickly。The current industry faces three main constraints: supply of Nvidia chips, related silicon materials and energy supply。THESE FACTORS TOGETHER CONSTRAIN THE PACE OF MARKET EXPANSION. AT THE SAME TIME, THE FUNCTIONAL UPGRADING OF AI TECHNOLOGY WAS MUCH FASTER THAN EXPECTED, FURTHER EXACERBATING THE NEED FOR HARDWARE. HOWEVER, CAPITAL EXPENDITURE HAS NOT KEPT PACE WITH THIS TREND, AND THE SECTOR AS A WHOLE REMAINS UNDER-SUPPLYED. IN OTHER WORDSAI's capital expenditure is still & ldquo; behind the innovation process & rdquo;I don't know。
Potential for end-of-year scenario and encrypted currency
Moderator:As you have mentioned many times, the 500 index could reach 7,000 or 7,500 points by the end of the year. In the end of the year you're looking at, which one do you think would be the biggest surprise
Tom Lee:FIRST, MARKET SENTIMENT HAS BECOME RATHER PESSIMISTIC OVER THE PAST FEW WEEKS. AS THE GOVERNMENT PAUSED TEMPORARILY TO DRAW AWAY FUNDS FROM THE ECONOMY AND THE MINISTRY OF FINANCE DID NOT DISBURSE FUNDS, LIQUIDITY CONTRACTED AND STOCK MARKETS SWAYED. EACH TIME THE INDEX DROPPED BY 2-3 PER CENT, OR THE AI STOCK FELL BY 5 PER CENT, PEOPLE BECAME VERY CAUTIOUS. I THINK IT'S VERY FRAGILE TO LOOK AT THE ROOT OF THE RISING MOOD, AND THERE'S ALWAYS A FEELING THAT THE TOP OF THE MARKET IS COMING. BUT I WANT TO STRESS ONE THING:When everyone thinks the top is coming, the top cannot be formed。The top of the Internet bubble was formed because no one thought that stocks would fall。
Second, you must remember that the strong market performance over the past six months has been accompanied by a serious deviation in the hold of people, which means that the potential demand for equities is enormous. In April this year, owing to tariff problems, many economists claimed that the recession was imminent, and institutional investors traded on the basis of it, actually preparing for a large bear market. It's not six months to adjust the wrong position。
Now that we are at the end of the year, 80 per cent of agency fund managers are lagging behind the benchmark index, which is the worst performance in 30 years. They had only 10 weeks left to make up, which meant they would have to buy stocks。
SoI think a few things will happen before the end of the year:
- THE AI DEAL WILL BE STRONG BACK:DESPITE THE RECENT WAVERING, THE LONG-TERM PROSPECTS FOR AI HAVE NOT BEEN AFFECTED IN ANY WAY, AND THE COMPANY IS EXPECTED TO MAKE A MAJOR ANNOUNCEMENT IN 2026。
- Financial and small capitalization units:If the Fed were to reduce interest rates in December to confirm its entry into a liberal cycle, it would be extremely beneficial for the financial and small capitalization。
- Encryption currency:Encryption money is highly related to technology, finance and small capitalization. So, I think we're going to have a large-scale。
Moderator: Since you mentioned encrypted currency, what level do you think Bitcoin will reach by the end of the year
Tom Lee:For Bitcoin, expectations have declined, partly because it has been organized across the board and some early Bitcoins holders (OGs) have sold at prices above $100,000. However, it remains a category of assets that are severely under-assetted。I believe that by the end of the year, Bitcoin has the potential to reach a high of $100,000, or even $200,000。
But for me, it is even more obvious that there may be a huge increase in Taifeng by the end of the year. Even “ wood sister ” Cathy Wood writes that stabilization and tokenized gold is encroaching on the demand for coins. And stabilization and tokenization gold run on smart contract block chains like the Etheraf. In addition, Wall Street is actively set up, and the CEO Larry Fink of Beled wants to monetize everything on the block chain. This means that the expectation of growth in the Etherport is rising。Our technical strategy manager, Mark Newton, is of the view that by January next year, the fare of the Taifeng could be 9,000 to 12,000 dollars。I think that this projection is reasonable, which means that the price of the ETA will not be more than doubled between now and the end of the year or next January。
Overestimated inflation and manageable geopolitics
Moderator:You mentioned that the Fear and Greed Index was 21 last Friday at “ extreme fear ” interlocking; and that CME's Fed observation tool showed a 70% probability of falling interest rates in December. Do you think that such performance pressures also drive institutional flows to encrypted currencies such as Taifung and Bitcoin
Tom Lee:yeah, i think so. over the past three years, the standard 500 has recorded double-digit increases for three consecutive years, which may even exceed 20 per cent this year. at the end of 2022, almost no one saw much. at that time, wealthy people and hedge funds advised clients to switch to cash or alternative assets — — private equity, private equity, venture capital — and — as a result, the performance of these asset classes was crushed. this “ mismatch ” retrogressive institutions。
Thus 2026 should not be considered the year of Bear City. Instead, investors will re-track high-growth stocks, such as Nvidia, as their profits continue to grow by more than 50 per cent。
AT THE SAME TIME, THE ENCRYPTION MARKET WOULD BENEFIT. ALTHOUGH THERE IS A GENERAL PERCEPTION IN THE MARKET THAT BITCOIN IS NEARING THE END OF ITS FOUR-YEAR CYCLE AND SHOULD ENTER THE ADJUSTMENT, THIS JUDGEMENT IGNORES THE MACRO-ENVIRONMENT. BUT THEY FORGOT THAT THE FED WAS ABOUT TO START CUTTING INTEREST RATES. OUR STUDY FOUND THAT THE ISM MANUFACTURING INDEX WAS EVEN MORE RELEVANT TO BITCOIN PRICES THAN MONETARY POLICY。UNTIL THE ISM INDEX REACHES 60, BITCOIN IS HARD TO REACH。
CURRENTLY, THE ENCRYPTED CURRENCY MARKET IS CONSTRAINED BY INSUFFICIENT MONETARY LIQUIDITY AND INVESTORS ARE PERPLEXED BY THE FACT THAT THE FEDERAL RESERVE ' S QUANTITATIVE AUSTERITY POLICY (QT), WHICH IS EXPECTED TO END IN DECEMBER, HAS NOT YET RELEASED A CLEAR SIGNAL OF EASING. HOWEVER, AS THESE MACRO-FACTORS BECOME CLEARER, THE ENCRYPTED CURRENCY MARKET IS EXPECTED TO BE MORE POSITIVE。
Moderator: What are the most overestimated risks to the current market, in your opinion
Tom Lee: I think the most overestimated risk is &ldquao; inflation returns &rdquao。Too many people believe that monetary easing or GDP growth can create inflation, but inflation is a mystery. We have experienced years of loose monetary policy without inflation. The labour market is now cooling, the housing market is weakening, and the three main drivers of inflation, — housing, labour costs and commodities, — and — none are rising. I even heard a Fed official say that inflation in core services is on the rise, and our verification revealed that it was totally wrong. The PCE core services inflation is currently at 3.2 per cent, below the long-term average of 3.6 per cent. It is therefore wrong to believe that inflation is growing stronger。
Moderator:If an unexpected situation, such as geopolitical, war or supply chain problems, leads to a sharp rise in oil prices, will this be a variable that will turn you into an empty space
Tom Lee:That possibility does indeed exist. If oil prices rise high enough to cause shocks. Looking back at the economic shocks caused by the past three non-DFs, these were commodity price shocks. But for oil to be a heavy burden on households, its prices need to reach a high level. The energy intensity of the economy has actually declined over the past few years。
SoOil prices need to be close to $200 to make that impactI don't know. The $100 price of oil, which we have been close to before, has not caused an impact. You really need to triple the price of oil. This summer, the United States bombed Iran's nuclear facilities, and it was predicted that this would lead to a sharp rise in oil prices to $200, but as a result there was little volatility。
Moderator:YesThe geopolitics has never prolonged the US economy or the US stock marketI don't know. We have had a partial shock, but never because of geopolitics has led to a real economic recession or a massive stock-fall in the United States。
Tom Lee:Exactly. Geopolitics can destroy unstable economies. But in the United States, the key question is: will corporate profits collapse due to geopolitical tensions? If not, then we should not use geopolitics as the main reason for predicting bear markets。
How to overcome fear and greed
Moderator: What would the market do if Federal Reserve Chairman Powell had unexpectedly failed to reduce interest rates in December
Tom Lee:In the short term, this will be negative news. However, while Chairman Powell did well, he was not welcome in the current Government。If he doesn't drop interest rates in December, the White House might speed up plans to replace the Fed Chairmani don't know. once replaced, &ldquao; shadow fed &rdquao; and this new &ldquao; shadow fed &rdquao; will establish its own monetary policy. therefore, i do not think that the negative effects will be so lasting, because the new president may not have to be subject to the voices within the fed, and the way monetary policy is implemented may change。
Moderator:Many of my friends have been holding cash since 2022 and are now very troubled, fearing that the market will be too high and that more will be missed. What are your suggestions for this dilemma
Tom Lee:That's a good question, because many people have this dilemma. When investors sell stocks, two decisions are actually needed: the sale and when to re-enter the market at better prices. Failure to ensure tactical re-marketing could result in the loss of long-term profits from panic sales. It is important for investors not to panic about stock sales due to market volatilityEach market crisis is actually an investment opportunity, not a time for sale。
Second, for investors who have missed market opportunitiesrecommended adoption of “ cast ” gradual return to the market rather than one-off inputs。It is proposed that investments be divided into 12 months or longer, with a fixed percentage of funds per month, so that even if the market falls, the cost advantage will be better obtained through bulk purchases. It should not wait for the market adjustment to re-enter the market, as many investors shared similar ideas, which could lead to further missed opportunities。
Moderator: How do you see the role of diaspora and institutional investors? It is believed that the cattle market was driven mainly by the diaspora。
Tom Lee:i would like to correct a general misconception that the performance of diaspora investors in the market is no less than that of institutional investors, especially those with a long-term investment perspective. many of the bulk investors invest in equities based on a long-term perspective, which makes it easier for them to take advantage of market dynamics. by contrast, institutional investors, who need to outperform their peers in the short term, tend to prefer market timing and may neglect the long-term value of certain stocks. anyone who operates the market from a long-term perspective can be considered &ldquao; smart money &rdquao; and such investors are more concentrated in the diaspora。
Moderator: For companies with three-digit margins like Palantir, many consider it too expensive. Under what circumstances do you think a three-digit market share would still be reasonable for long-term investors
Tom Lee:I've divided the business into two circles: the first is the companies that don't make money but have a 100-fold gain (about 40 per cent of the 4,000 listed companies outside the plate), most of which are bad investments。
THE SECOND ROUND IS THE SO-CALLED N=1 ENTERPRISE:
1. These companies are either laying the foundations for a huge long-term story and are therefore not profitable
2. Either its founders are constantly creating new markets, leaving the current profit streams unable to reflect their future。
Tesla and Palantir are examples. They deserve a very high valuation multiplier, because you are discounting their future. If you insist on paying 10 times the rate for Tesla, you'll miss the opportunity of the last seven or eight years. You need to think differently about these unique, founder-driven businesses。
Lessons learned and final recommendations
Moderator:Many say that this rebound was too concentrated on a few stocks, such as Inweida, which is a huge sign of bubbles. Do you agree with that
Tom Lee: Artificial intelligence is a scale businessWhich means you need to invest a lot of money. You and I can't create a product in the garage that competes with OpenAI。
SCALED INDUSTRIES ARE LIKE ENERGY OR BANKING. THERE ARE ONLY EIGHT MAJOR OIL COMPANIES IN THE WORLD. IT WOULD BE ABSURD TO SAY THAT OIL IS A CIRCULAR BUSINESS, BECAUSE THERE ARE ONLY EIGHT COMPANIES IN THE WORLD THAT ARE BUYING OIL. BECAUSE YOU HAVE TO BE BIG ENOUGH TO DRILL FOR OIL. THE SAME APPLIES TO AI, WHICH IS A SCALABLE BUSINESS. THIS IS ILLUSTRATED BY THE CURRENT MARKET PATTERN. DO WE WANT YVETTE TO DEAL WITH THOUSANDS OF SMALL COMPANIES? I WOULD RATHER THEY WORK WITH LARGE COMPANIES THAT CAN DELIVER RESULTS AND ENSURE FINANCIAL VIABILITY. SOI think the current concentration is logical。
Moderator:Despite the fact that you have been working in this industry for 40 years, what are the most important lessons that the market has taught you personally in the last two years
Tom Lee: &ldquao for the past two years; collective misinterpretation/misunderstanding &rdquao; can last for a long timeAs we said at the outset, many people believe in recession because of the upside of the yield curve, and while corporate data do not support it, they prefer to believe in their anchorage. As a result, companies become cautious and adjust their strategies, but the profits remain high. Many times people choose to believe in themselves rather than in data when data conflict with their views。
Fundstrat was able to keep up the boom because we did not stand by our point of view, we were anchoring profits, and profit data proved everything. What can I say? We have only followed a different set of data that ultimately drives stock prices。
to distinguish between “ &rdquao with conviction; control and &ldquao; stubborn &rdquao; stubborn)I don't know. Perseverance is to feel smarter than the market; faith is based on what is right. Remember, in a room full of geniuses, you can only do averages。
Moderator:Peter Lynch says “ more money to correct the loss than to correct itself & rdquo; What do you think
Tom Lee: There are a few reverse masters in the market, such as Peter Lynch, David Tepper and Stan Druckenmiller, who are good at making decisive decisions when market moods are low. In the case of Nvidia, when its stock price fell to $8, many people were afraid to buy it, and the subsequent 10 per cent decline in stock prices further exacerbated investors ' hesitation. In Tom Lee ' s view, the stubbornness resulting from this emotionalization often stems from a lack of firm conviction rather than rational judgement。
Moderator:How do you explain the emotional, rather than fundamental, response of many investors when markets fall
Tom Lee:It's a behavioural problem。& ldquo; crisis & rdquo; composed of “ danger & rdquo; dandger and “ opportunity ” access. the majority of people in the crisis are concerned only with danger。when the market falls, people think only about the risks to their portfolio, or think that &ldquao; god, i must have missed something because i believe that the good idea should rise every day。
But in fact, they should see this as an opportunity, because markets always give you an opportunity. The tariff crisis of February to April this year is a good example. Many have come to another extreme, thinking that we will be in recession or that everything will be over, but they only see danger and no opportunity。
In additionThe influence of emotions and political prejudice on market perceptions is significantearlier consumer sentiment surveys had shown that 66 per cent of respondents were in favour of the democratic party, and that their response to the economy was even more negative, while the stock market was unable to identify such political affiliation differences. companies and markets themselves are independent of political views and investors need to move beyond emotional and political bias. & ldquo in investment; fan mentality & rdquo; and self-esteem factors may lead to bias in decision-making, such as investors tending to bet on their preferred companies or to gain a sense of recognition when stocks rise, but fall. even machines cannot completely eliminate prejudices, because their design is still human。To better address these impacts, investors need to focus on super-cyclical and long-term trendsFor example, the mission of Nvidia or Palantir in AI does not alter the long-term potential of even short-term fluctuations in equity prices。
Moderator: In the end, what would you say if one sentence were used to describe the stock market for the next 12 months
Tom Lee: I would say: “ fasten your seat belt. ”
Because over the past six years, the market has gone up a lot, but we've been through bear towns four times. That means we're going through Bear City almost once a year, which will test your resolve. So I think people need to be prepared, because next year there will be no difference. Remember, we fell 20 per cent at some point in 2025, but eventually it could rise 20 per cent throughout the year. So remember, this is likely to happen again。
Moderator:Besides, what advice do you have for new recruits who didn't enter the market until 2023 and have never seen a real kickback
Tom Lee:First of all, it feels great when the market rises, but you'll question yourself for a very long and painful time. But it was at that time that you needed determination and faith most. BecauseMuch more money is earned at the lower end than at the higher end of the bargain。