Tom Lee Says It's NOT A Bubble And Stocks Are STILL Cheap

About this video

• Video Title: Tom Lee Says It's NOT A Bubble And Stocks Are STILL Cheap
• Channel: From The Desk Of Anthony Pompliano
• Speakers: Anthony Pompliano, Tom Lee
• Duration: 24:17

Overview

This video features a conversation between Anthony Pompliano and Tom Lee, discussing the current stock market conditions, the AI bubble, Bitcoin, gold, and the influence of macroeconomics and politics on market sentiment. Tom Lee argues that despite popular concerns, the stock market, particularly in the AI sector, is not in a bubble and that stocks remain undervalued when considering future productivity gains. They also touch upon the dynamics of the cryptocurrency market, historical market cycles, and the impact of political divisions on investment decisions.

Key takeaways

• AI is not a bubble: Tom Lee believes that the AI sector is far from being a bubble, citing Nvidia's current valuation (27x forward earnings) as significantly lower than historical comparables like Cisco in 1998 (56x forward PE) and even other retail companies like Costco and Walmart. He highlights Nvidia's unique position as a scarce provider of essential AI chips.
• Stocks are still cheap: Lee argues that stocks are undervalued because they need to discount future productivity gains from AI, which go beyond simple labor replacement. He suggests that historical valuation metrics might not be directly applicable due to shifts in monetary policy and the nature of corporate earnings (more recurring revenue).
• Gold's recent run is supported by technicals and new demand: The significant rise in gold prices is partly explained by a technical "cup and handle" pattern. Additionally, the increasing creation of dollar-based stablecoins, which are often over-collateralized and have been buying gold, is identified as a new source of demand.
• Bitcoin's potential upside is linked to gold: Lee suggests that if gold reaches a market cap that equates to $5,000 per ounce, Bitcoin's network value could potentially reach $1.6 to $2 million per coin within five years, as Bitcoin often follows gold's movements.
• Market sentiment is heavily influenced by politics: The "most hated rally" is attributed to a political divide, with a majority of hedge fund managers and venture capitalists being Democrats who may view policies associated with Republican figures negatively, leading to a defensive stance despite positive market indicators.