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Fundstrat's Tom Lee says that trillions of dollars are flowing to risk-tolerant Millennials to increase stock market fundamentals over the next few years.
Lee identified four factors that demonstrate the magnitude of the generational wealth transfer.
"I believe that both crypto as well as the equity markets will be powered by millennials," Cathie Wood of ARK Invest stated last week - citing Lee's work previously to support this theory.
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Fundstrat's Tom Lee said that trillions of dollars are flowing to risk-tolerant Millennials to help boost stock market fundamentals over the years.
Based on previous research, Lee identified four factors that demonstrate the magnitude of the generational wealth transfer currently underway.
Fundstrat estimates that $2 trillion in wealth flows annually from Baby Boomers and Millennials through inheritance.
In the next 20-years, Millennials will inherit $76 Trillion from previous generations
Millennials prefer high-risk assets such as stocks and crypto.
The relative wealth of Baby Boomers is shrinking. This means that Millennial asset preferences will drive a structural shift.
Lee stated that these data points point to the conclusion that investors should take a long-term bullish approach to stocks.
"Can one structurally bearish stocks if this is true?" He said.
Lee previously made similar arguments for permanent bullishness by pointing out other structural factors such as easy monetary policy, abundant cash on the sidelines, and others.
"Bull market to 2038?" This is a possible base situation. This is a possible base case. "If demographics are destiny then US stocks will do very good," Lee wrote in June, noting that every stock market peak since 1900 coincided with a generation peak.
Cathie Wood of ARK Invest shares this theory and has cited Lee’s research as proof.
Wood stated that millennials will power both equity and crypto markets. This was his belief at a conference last Wednesday. "They are excited about the new technologies, they understand them and feel comfortable with them.
Lee wrote a Friday note discussing new Federal Reserve data showing that US household wealth increased to $142 trillion during the second quarter. Only $46 trillion was invested in stocks in the US, meaning that $100 trillion could theoretically still be allocated for equities. This shows how little stock have to run.
He explained that wealth inequality in America does not seem as severe as the headline numbers suggest. Noting that the richest 20 Americans are "ridiculously rich", but only 1.2% of US wealth, he also pointed out why.
Lee stated that this means America has a lot wealth and that there are only a few mega-rich people.
