By Geoffrey Rogow | Photographs by Evan Angelastro for The Wall Street Journal
Thomas Lee has been dismissed and derided for being a permabull.
The Wall Street analyst has also been right.
On the morning of March 24, Mr. Lee, co-founder of research firm
Fundstrat Global Advisors, told more than 1,000 clients on his
firm's conference call that the market would hit new highs by the
end of the summer.
Mr. Lee's prediction was improbable. At that exact moment, the
Covid-19 pandemic had brought New York to a standstill and several
markets were breaking down. But by August, the market had returned
to new highs.
"We saved a lot of folks from disaster," said Mr. Lee, who
provides stock research and market forecasts with his 17-person
team. "Sometimes you have to put your hat on the ground and say:
'This is the bottom.'"
Over the last 30 years, the Michigan-raised Mr. Lee has garnered
a reputation as one of Wall Street's most aggressive market
optimists, working at Kidder, Peabody & Co., Salomon Smith
Barney, JPMorgan Chase & Co. and now his own research firm.
Critics of Mr. Lee's optimism would say that a broken clock is
right twice a day. And it's true that his research often comes to
the same conclusion: Markets go up. But in the midst of a market
that has regularly defied skeptics, Mr. Lee's sunny forecasts have
often proven prescient.
Mr. Lee's call in March wasn't his only big decision last year;
he also changed his own business thanks to the pandemic. Instead of
focusing solely on markets, he shifted his regular markets
newsletter to a nightly research project that examined the latest
coronavirus data. This was possible in large part thanks to the
efforts of his firm's quantitative analyst Ken Xuan, who is
affectionately known by readers as "tireless Ken."
The decision to pivot proved fruitful. Mr. Lee's nightly
readership of institutional clients now sometimes numbers above
80,000, up from fewer than 5,000 at the start of the year. Working
professionals and even health-care workers have signed up.
To make money, Fundstrat has more than 150 paying clients from
money-management firms, hedge funds and other investors. These
firms pay Fundstrat tens of thousands of dollars a year to hundreds
of thousands a year for insight provided through newsletters,
conference calls and special bespoke projects. The firm also has an
offering tailored to financial advisers and individuals called
"Some people dismiss me. They say, 'Oh Tom, you're just a bull.'
But people keep paying us because we've helped them make money,"
said Mr. Lee in a video interview from his home in Connecticut.
Mr. Lee, 51 years old, said his research is rooted in an
analysis of history and trends. The market has, in fact,
historically gone up most of the time.
Still, Mr. Lee's preference for optimism has cost him when bull
markets have turned ugly.
In the 1990s, he was a wireless-technology analyst and was
largely optimistic about that industry's future. That view was hit
hard when the dot-com bubble burst.
He was similarly wrong-footed on housing ahead of the 2008-09
financial crisis. He said his biggest lesson learned from that is
how junior stocks are to the credit markets. In his view, once
credit markets lose confidence, no financial markets can withstand
"I can't refute critics. I don't know what's gonna happen. The
stock market doesn't care for my opinion, so I just have to try to
understand what the market is saying," he said.
When critics have picked arguments with Mr. Lee on television or
in person, those close to him say Mr. Lee never pushes back.
Instead he attempts to counter with data. He is best known for an
understated, academic-like posture.
The son of a psychiatrist and a homemaker turned Subway
franchise owner, Mr. Lee often cooks to unwind after a long day. He
is particularly fond of trying to make the Korean dishes his mother
made for him as a child.
Mr. Lee's clients include professionals from the
asset-management giants Fidelity Investments and BlackRock Inc.
John Gordon, senior managing director at the investment firm
Deltec Asset Management, was listening when Mr. Lee made his March
call. He said the prediction stands out for one simple reason: it
helped him make money for his clients. Mr. Lee "stuck to his guns,
and he was awfully alone," Mr. Gordon said.
As to how and why the market turned around, Mr. Lee has publicly
and in his newsletter attributed the move in part to the Federal
Reserve's writing a new playbook within days to address the
collapsing economy and market. That didn't drive his call at the
time but was certainly a major factor in why it turned out to be
In making his forecast, Mr. Lee said that historical data showed
rapid market declines were almost always followed by quick
turnarounds. A fast rebound was probably going to happen again, he
said, even if the economy took longer to recover.
He backed up the call with a series of charts in his newsletter
Fundstrat, like a lot of small businesses, faced a concerning
start to the year as the pandemic threatened to destroy its
customer base. The firm made the decision to pivot its
"In March, Fundstrat could have faced extinction, but it turns
out people felt we were there in their hour of need," he said.
Write to Geoffrey Rogow at firstname.lastname@example.org
(END) Dow Jones Newswires
January 23, 2021 06:19 ET (11:19 GMT)
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