- June 9, 2021
- Posted by: Matthew Fox
- Category: Featured
- A recent note from Fundstrat’s Tom Lee on demographics and the stock market caught the eye of Ark Invest’s Cathie Wood.
- During a Tuesday webinar, Wood said she agreed with Lee that millennials will drive the stock market higher for years to come.
- “I agree with Tom Lee. We are in a magnificent period for equities. The bull market has broadened out and it has strengthened,” Wood said.
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Ark Invest’s Cathie Wood’s agrees with Tom Lee and his recent note that a demographic boom driven by millennials will power the stock market higher for years to come.
Wood made the comments in a webinar on Tuesday, in which she said, “I agree with Tom Lee. We are in a magnificent period for equities. The bull market has broadened out and it has strengthened. And we believe it has duration.
Wood was referencing a note from Lee that was published las week, in which he detailed the demographic rise of millennials as they enter their prime age in terms of earnings growth. That will help fuel the formation of families and the purchases of homes and vehicles, all of which represent a considerable multiplier for economic growth, according to the note.
Lee said the millennial generation’s earning potential won’t peak until 2038, and that the S&P 500 could surge nearly 400% by then to 19,350.
Wood said she pays close attention to demographics, as it proved useful in forecasting future market moves earlier in her career. Wood said we are now seeing an echo of the baby boom dynamics that helped power a 20-year bull market in stocks during the 1980’s and 1990’s.
“I do believe that real growth is going to look scarce,” Wood explained, explaining that current GDP readings are based on the industrial age rather than the digital age. “We do believe that there is going to be spectacular growth based on innovation,” Wood said.
While Wood agrees with Lee on the demographics and stock market forecast, one area they might disagree is how to best position portfolios to take advantage of the potential move higher in stocks, at least in the short-term.
While Wood focuses on investing in high-tech companies disrupting other industries, Lee has been recommending his clients cut back their tech exposure and add to cyclical stocks tied to the physical reopening of the economy, like financials, energy, and materials.
But in the long-term, both Lee and Wood have signaled that high-growth technology companies have more room to grow.
“We think that this demographic shift also is a boon for housing, of course, and crypto, which is the millennials new asset class,” Wood concluded.