The Meb Faber Show
Tom Lee: The Market Can Climb Higher—But Expect Turbulence | #630
Why It Matters
Understanding these dynamics helps investors navigate a market that appears strong on the surface but may face volatility from macro shocks and policy changes. The episode offers timely insight for anyone managing portfolios in 2024, especially as oil markets and the Fed’s new stance could reshape risk assessments.
Key Takeaways
- •S&P 500 near 7,300, possible climb to 7,800.
- •Oil price spikes unlikely to trigger U.S. recession.
- •Private credit risks remain non‑systemic, underwriting stronger than perceived.
- •Software sector offers high reward despite recent price lows.
- •New Fed chair may cause market turbulence later this year.
Pulse Analysis
The episode opens with Tom Lee confirming that the S&P 500 is hovering around the 7,300 mark and could push toward 7,800 despite ongoing geopolitical risks. He argues that record‑high oil prices—currently near $100 per barrel—are not sufficient to derail the U.S. economy, citing the market’s resilience amid a prolonged war and elevated inflation. This macro outlook frames the broader narrative that investors should expect continued upside potential, but remain vigilant for short‑term volatility.
Lee then pivots to sector‑specific drivers. He highlights private credit as a lingering risk, yet stresses that underwriting standards are better than most assume, keeping the threat largely non‑systemic. In contrast, software stocks sit at 15‑year relative‑price lows, presenting a compelling upside as AI integration reshapes business models. The discussion also flags the new Federal Reserve chair’s divergent inflation views, suggesting that policy uncertainty could spark market turbulence later in the year.
Finally, the conversation turns to sentiment and investor behavior. Lee critiques traditional surveys like the University of Michigan index for partisan bias and methodological flaws, noting that sentiment can swing sharply without signaling a true market top. He underscores the need for broader financial education—basic concepts like dividends and compounding—to improve decision‑making. The episode concludes that while optimism remains justified, a blend of macro vigilance, sector analysis, and better-informed investors will be essential for navigating the next market cycle.
Episode Description
Today’s guest is Tom Lee, CIO of Fundstrat Capital, PM for the Granny Shots U.S. Large Cap ETF, and the Head of Research at Fundstrat Global Advisors. Prior to co-founding Fundstrat, he served as J.P. Morgan’s Chief Equity Strategist from 2007 to 2014.
In today’s episode, Tom explains why stocks have remained resilient despite war, higher oil prices, and widespread investor skepticism. He shares his outlook for the S&P 500 and discusses the coming wave of mega-IPOs.
Finally, Tom covers his successful entrance into the ETF space with the Fundstrat Granny Shots ETFs.
(0:00) Starts
(1:35) Tom Lee on markets since the Iran war
(10:02) Issues with the University of Michigan Consumer Sentiment Index
(20:50) AI & upcoming IPOs
(24:34) Granny Shots ETF
(31:25) Tom on crypto
(36:52) Tom's most memorable investment
Visit www.fundstrat.com/tom for complimentary access to Tom's daily insights, market alerts, live webinars, and stock lists.
Sponsor: Want to learn more about 351 Exchanges? Visit the Alpha Architect 351 Education Center for use cases, tools, FAQs, upcoming launches, and more. Investments in securities entail risks, including possible loss of principal and are not suitable for all investors.
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Past guests include Ed Thorp, Richard Thaler, Jeremy Grantham, Joel Greenblatt, Campbell Harvey, Ivy Zelman, Kathryn Kaminski, Jason Calacanis, Whitney Baker, Aswath Damodaran, Howard Marks, Tom Barton, and many more.
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Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).
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