Video summary

Tom Lee: Bear Market Coming in 2026 – Use It As Buying Opportunity

Main summary

Key takeaways

Finance

Finance-focused Summary (Markets, Investing Strategies, Macro, Assets)

Core Advice / Behavioral Strategy

  • Don’t time the market (behavioral framing):
    • Market timing often leads investors to buy at the bottom and sell at the top, preventing full benefit from compounding.
    • For 2026, Lee warns of turbulence / bear-market-like drawdowns, but advises treating pullbacks as buying opportunities, not a reason to sell and avoid stocks.
  • Long-term holding focus:
    • Avoid emotional trading (e.g., selling due to fear, missing buybacks).
    • In both stocks and crypto, the emphasis is on staying invested to capture compounding.

“Market timing” is presented as harmful to long-term performance; the response to volatility should be patience, not exit.

2026 Market Outlook (Drawdown + Timing)

  • Base case: 2026 continues the bull market that began in 2022, with greater economic resilience.
  • Key transitions markets must absorb (2–3 major shifts): 1) A new Fed (“market tests a new Fed”) and related policy/credibility uncertainty 2) White House policy: “more deliberate in picking winners and losers” - Disruption noted in technology consulting and healthcare - Broader cross-sector uncertainty expected in 2026 3) Uncertainty about how much is already priced into AI - Includes questions on energy/data-center capacity and AI longevity

Potential Correction Magnitude

  • Possible ~10% correction (noted as it may still “feel like a bear market”)
  • Alternatively, 15%–20%
  • He suggests a round trip scenario:
    • Down at some point early or during the year,
    • then finishing strong.

Long-term Bull Thesis Remains Intact

Lee reiterates confidence in the US / innovation theme, citing:

  • Demographics
    • Prime-age workforce tailwind and narratives tied to Gen Z / Millennials / Gen Alpha wealth transfer
  • AI / robotics progress
    • Robots + integration
  • Blockchain adoption by finance
    • Includes a reference to Jamie Dimon publicly highlighting blockchain’s value to financial services

Tickers / Assets / Instruments / Sectors Mentioned

Equity / Sector Themes

  • “MAG 7” (no specific tickers provided)
  • Energy
  • Basic materials
  • Financials
  • Industrials
  • Small caps
  • Healthcare (referenced due to 2025-era policy disruptions)
  • Tech / AI ecosystem / hyperscalers (no specific tickers provided)
  • Non-US equities referenced generally, plus specific semis:
    • ASML
    • TSMC

Crypto

  • Bitcoin
  • Ethereum
  • Tether (stablecoin; USDT referenced)
  • Stablecoin market makers (conceptual)

Gold + Metals

  • Gold
  • Silver
  • Copper
  • Metals referenced more broadly

ETFs / Company Products (as described in context)

  • “Granny Shots” ETF / “Granny Grny” (Fundstrat brand; no ticker shown)
  • Granny J (small/midcap ETF; no ticker shown)
  • Granny income-oriented ETF (no ticker shown)
  • Bitmine Immersion Technologies (Ethereum treasury company)
  • Beast Industries / “Mr. Beast” investment (non-public company; $200M mentioned)

Named Brokers / Sponsors (not necessarily investments)

  • Interactive Brokers
  • ElseG

Methodologies / Frameworks Explicitly Stated

“Don’t Time the Market” (Behavioral Framework)

  • Avoid emotional selling and missing buybacks.
  • Hold long enough to benefit from compounding in both stocks and crypto.

“How to Judge Market Tops” (Margin Debt Signal)

  • Watch NYC margin debt growth rate:
    • Cited: NYC margin debt at an all-time high
    • Up 39% year-over-year (YoY)
    • Local top heuristic: growth closer to ~60% YoY
  • Interpretation:
    • Because growth is only 39% YoY, markets may not have fully peaked.

Gold Allocation Logic (Store-of-Value vs Commodity Framing)

  • Treat gold primarily as a dollar alternative / store of value, not a standard industrial commodity.
  • Emphasis is on gold’s long historical role and scarcity framing.

Key Numbers, Targets, Yields, Growth Rates, Recommendations

2026 Drawdown / Timing

  • 10% possible correction
  • 15%–20% possible correction
  • Possible round-trip: down sometime during the year, then finish strong.

Bitcoin / Crypto

  • Bitcoin target: $250,000 “this year”
  • 2026 as a “test”:
    • If Bitcoin makes a new all-time high, it implies prior deleveraging may be behind.
  • Major deleveraging catalyst:
    • October 10 described as the largest deleveraging event in crypto history
  • Post-event drawdowns:
    • Bitcoin: down >35%
    • Ethereum: down ~50%
  • ETH scenario if:
    • ETH/BTC returns to 2021 highs
    • Bitcoin reaches $250k
    • Lee estimates Ethereum could be ~12,000
    • Current ETH cited: ~3,000

Gold Allocation

  • Example recommendation: Ray Dalia recommends up to 10%
  • Lee’s discussion references “15%”, then notes many are at zero, concluding gold is “underowned”
  • Gold size narrative (as stated):
    • Industrial + retail jewelry gold sales: ~$120B (last year)
    • Network value: ~$30T

Gold Drivers (Central Banks + Stablecoins)

  • Tether (USDT) described as the largest private buyer of gold since July
  • Correlation claim: USDT supply vs gold price since July
  • Scaling claim: only “maybe one central bank” bought more than Tether

Tether / Earnings Economics

  • Expected Tether earnings: almost $20B in 2026
  • Valuation/profitability claims:
    • Top five in bank profits (per Lee)
    • Valuation could be #2 only to JP Morgan
    • “Twice the valuation of Goldman Sachs or Morgan Stanley” (as stated)
  • Efficiency / headcount claim:
    • Tether: ~300 employees
    • JP Morgan: ~300,000 employees
  • Balance sheet claim:
    • Tether is less than 1% of M1, “tiny balance sheet” (as stated)

ETF AUM / Fundraising (Granny-branded ETFs)

  • “Granny Shots” ETF AUM:
    • Around $2B AUM in August
    • Later cited: $4B+ (also described as $4.7B across the three, with the main one “4 and a bit”)
  • ETF breakdown (total: $4.7B):
    • Granny J (launched Nov): about $355M
    • Income-oriented Granny:
      • First dividend in December
      • Posted/target yield around 10%
      • Yield-linked assets: ~$55M (as stated)

Small-cap / Timing View (within “don’t time the market” framing)

  • Even without timing, small/midcaps have underperformed for so long that a 5–6 year cycle of outperformance is possible.
  • Caveat:
    • Granny “isn’t going to go up if the market goes down” (hedge/behavior caveat)

Macro / Rates / Inflation

  • Inflation measures cited:
    • “True inflation” and “median inflation” both referenced as 1.8%
  • Housing + CPI lag:
    • Housing costs lag in CPI; falling housing prices provide cover for Fed cuts
  • Fed cut optimism:
    • Rate cuts framed as ultimately good for equities because underlying inflation is lower than the printed measure
    • Easing effects expected for consumer installment debt and mortgage affordability

Margin Debt Growth (Market Peak Indicator)

  • NYC margin debt:
    • All-time high
    • Up 39% YoY
    • “Local top” heuristic: ~60% YoY

Sector / Asset Positioning Recommendations (Implied)

Equity positioning

  • Maintain “MAG 7”, but consider cyclicals more attractive for 2026:
    • Lee still likes Mag 7 for earnings growth, expecting outperformance if they “don’t date” (interpreted as not derailing).
  • Top sector pick ahead of 2026:
    • Energy and basic materials
    • Rationale: mean reversion—energy/basic materials underperformed heavily over the last 5 years.

Energy vs Oil Price Caveat

  • Energy stocks and oil prices don’t correlate well short term.
  • Even with near-term oil weakness/volatility, energy stocks may benefit from expectations around:
    • data center growth
    • shift away from alternatives that supports future oil demand

Basic materials linkage to copper/silver

  • If gold/silver/copper have negative returns, basic materials likely won’t work as a trade.
  • Lee expects silver and copper to have better years than gold.
  • Copper described as linked to ISM:
    • If copper has upside, it supports basic materials.

Financials: “Quality + rerating”

  • Banks aren’t “cheap” (no exact P/B or P/E given), but Lee argues earnings durability is improving:
    • Banks investing in tech/AI
    • Compensation as the largest expense → reduced reliance on employees could lift margins
    • Less earnings variability → potential valuation rerating toward a premium
  • Historical valuation references (contextual):
    • Previously ~1x price-to-book or ~10x earnings; now he expects a premium

Crypto / Gold Relationship and Key Cautions

  • Crypto didn’t track gold last year due to deleveraging:
    • Lee attributes the breakdown to crypto deleveraging events impairing market makers (“central bank of crypto” analogy).
  • Bitcoin vs “digital gold” caution:
    • Bitcoin is maintained as “digital gold,” but ownership bases differ from traditional gold holders.
    • Result: adoption path can be higher but jagged.

Disclosures / Disclaimers (Gist)

  • Views are for general information only.
  • Nothing constitutes financial promotion, investment advice, or a personal recommendation.
  • Similar sponsor-level disclaimers appear (e.g., mentions including BNY Investments).

Presenters / Sources Mentioned

  • Tom Lee (Fundstrat Global Advisor co-founder and head of research; also chair of Bitmine Immersion Technologies)
  • Wilfred Frost (host; Master Investor podcast)
  • Episode sponsors/partners mentioned:
    • BMY Investments
    • LEG
    • Interactive Brokers
    • ElseG
    • BNY Investments
  • Other referenced figures/companies:
    • Ray Dalia
    • Mark Newton
    • Jamie Dimon / Jamie Diamond
    • Larry Fink / Larry Frink (tokenization comment referenced; “Larry Fink” implied)
    • Vlad (Robin Hood founder implied; “Vlad at Robin Hood” mentioned)
    • Ronaldo / Cristiano Ronaldo (audience/follower comparison)
    • Jeff Henbold (CEO of Beast Industries referenced)
    • J.P. Morgan, Goldman Sachs, Morgan Stanley
    • SpaceX (gold meteor thought experiment)

Original video