In the ongoing election year, the stock market and the wider economy have been the focus of attention. There are differing opinions regarding whether the remarkable growth will continue or if there is impending doom and gloom. Tom Lee, an expert from Fundstrat, decided to take a look into the future and make a prediction for the S&P 500, one of the biggest benchmark indices in the U.S., for the year 2030.
Lee is extremely optimistic about the next six years and predicts that the S&P 500 will reach 15,000 within that time frame. This would mean a growth of 173.83% from its current levels of 5,477.90.
While a 173.83% rise may not sound as impressive compared to the rapid growth of certain blue-chip stocks like Nvidia, which saw a 200% increase within months, it is worth noting that the S&P 500 has only grown by 86.21% in the last five years.
Lee’s projection for the S&P 500 hitting 15,000 by 2030 is based on two main arguments. Firstly, he believes that the surge he predicts will be driven by Millennial and Gen Z investors, who will enter the prime earning age bracket of 35 to 50 within that time frame. He draws parallels to the Roaring Twenties and the post-war boom of the 1950s and 1960s as examples of how this dynamic might play out.
Secondly, Lee believes that the American technology sector will be a major driver of the boom. He expects the sector to continue its remarkable growth as the artificial intelligence (AI) boom matures.
However, recent economic trends offer some counter-arguments to Lee’s forecast. The role of Millennials and Gen Z in the stock market may be lesser than anticipated, as suggested by anecdotal evidence, reports on real wage growth, and wealth concentration. Additionally, the argument for the AI boom is mixed, as there are prominent voices that have labeled it a bubble and doubt its long-term usefulness without further breakthroughs.
Lastly, it is worth noting that the boom of the 1920s was followed by the Great Depression, and the post-war boom resulted in a major inflation crisis. These historical precedents caution against assuming that a boom will always lead to sustained positive outcomes.
