S&P 500 at 15,000 by 2030? This Analyst Says Yes

The year 2030 isn’t very far away now, but a lot can still happen by then. Indeed, Tom Lee of Fundstrat sees the S&P 500, which is currently between 5,000 and 6,000, potentially reaching 15,000 by the end of this decade.

That’s a bullish call, but for Lee, it’s evidently part of a bigger movement in which Millennials and Generation Z or Zoomers will control large amounts of the nation’s wealth. “If this is a normal S&P cycle following demographics… [the] S&P should be potentially 15,000 by the end of the decade,” Lee predicts.

It’s interesting to consider that Millennials still don’t control the flow of money in America. It’s a demographic with vast numbers of people, but the impact of COVID-19, high interest rates, and inflation have made it difficult for Millennials to save and invest money in the 2020s.

Yet, Millennials and Zoomers are still young and near the beginning of their wealth-building journey. The average age of Millennials is currently around 31, and 2.5 billion Millennials around the world are in the early stages of the prime wealth-building age bracket of 30 to 50 years old. Plus, the Zoomers are right behind the Millennials, and they’re surprisingly savvy about stock investing.

Courtesy: Fundstrat

This chart is a few years old now, but it gets the point across. Millennials are right in the home-purchasing age category, and although interest-rate hikes made it more difficult to own a home, the wealth cycle of Millennials and Zoomers will certainly outlast the currency high-interest-rate cycle.

While Millennials might have a tough time purchasing their first or second home now, at least they’ve entered into a time when stocks have provided good returns. Lee explains, “This would be the third time that stocks entered a cycle where annual returns compound at high teens. You had the roaring ’20s, and then you had the ’50s through the late ’60s, and this is a third cycle.”

These bullish cycles have something in common, and it involves age-demographic cohorts controlling the nation’s wealth. “They all coincided with a surge in the number of people aged 30 to 50, so in other words the number of prime age adults, and this time it’s powered by Millennials and Gen Z,” Lee clarified.

It’s not difficult to see how Lee’s theory fits with his forecast of the S&P 500 possibly reaching 15,000 by 2030. After all, Millennials will be approaching their earning-power prime at that time and they’ll be able to spend large amounts of money, which is good for business.

As Lee, puts it, “It’s a demand story. When you get to your prime years, 30-50, Urban Institute shows you start to borrow more money, you’re making big life decisions, this is what powers the economy.”

Of course, this isn’t to suggest that Millennials and Zoomers will have an easy time building and maintaining their wealth. They’ve inherited a tremendous national debt burden, and just the interest payments will put a strain on the economy for years to come.

Still, Lee’s points are duly noted. Demographic shifts probably won’t affect the S&P 500 in the short term, but in a few years, the impact of younger generations’ earning and spending power cannot be overlooked.

That said, I suspect that Millennials and Generation Z won’t only pour money into big businesses and S&P 500 stocks. They’re savvy about Bitcoin and Ethereum, as well as gold and silver. They have access to educational resources and real-time data that previous generations couldn’t even imagine.

Besides, what’s good for big businesses can be even better for smaller ones. So, even if you agree with Lee’s bullish S&P 500 predictions, consider how much more bullish his argument could be for small-cap stocks, gold and silver miners, cryptocurrency, and other interesting assets with robust growth potential.