After what Tom Lee, head of research at Fundstrat Global Advisors, calls a series of “extinction events” over the past four years, investors could be forgiven for feeling nervous. However, the scars from these recent crises have dampened economic and investor sentiment, creating a spring for a bullish 2026, the top analyst said.
talking about Professor G Markets PodcastLi believes the market’s resilience in the face of relentless shocks is a sign of underlying strength. He identified six “extinction events” that would unsettle markets, including the COVID-19 pandemic, supply chain crises, the fastest inflation cycle in history, and the fastest series of rate hikes in the history of the Federal Reserve. Additionally, Lee noted that destabilizing factors involving tariffs and geopolitical tensions, such as the U.S. strike against Iran, have collectively “made investors very nervous about…investing at full risk because that’s six black swans happening in four years,” referring to Nassim Nicholas Taleb’s famous market theory.
Lee’s comments came before a U.S. attack on Venezuela, another example of geopolitical tensions roiling markets. On January 5, he doubled down on his CNBC show scream boxindicating that 2026 will be a year of strong market fundamentals, while Emphasize that the market needs to digest The three-year average annual return exceeds 15%.
The “Wall of Worry” and Market Corrections
Lee talks about his philosophy with podcast hosts Ed Elson and Scott Galloway. “The market has climbed a wall of worry,” he said, arguing that the market “doesn’t peak when people are bearish,” but rather when people are euphoric and prices no longer react to good news. For now, skepticism remains high, and Lee sees this as a contrarian buy signal.
However, the road to prosperous years can be filled with volatility. Lee predicted a “mini-bear market” or sharp decline before a full recovery. He explained that it’s rare for the stock market to have three big returns in a row, and historically it’s a sign of the need to consolidate gains. “I think despite all the skepticism, we’re ultimately going to see a bullish outcome,” Lee said, noting that a pullback in 2026 could be a buying opportunity rather than the end of the cycle.
The third era of labor shortage
A key factor in Lee’s 2026 plan is the tech industry, driven by massive demographic changes. He believes that the United States is in an era of chronic labor shortages. “We have entered the third era, the era of labor shortages, which begins in 2018 and will last until 2035,” he predicted. This will require massive spending on technology to replace missing workers.
He links the current craze in artificial intelligence with the introduction of Frozen food in the 1920sThis ultimately reduced the agricultural labor force from 40% to 2% of the workforce, while lowering food costs, according to Fundstrat research. In a similar vein, he said he believes AI will create efficiencies rather than destroy the economy.
“Let’s say there was a CNBC show in 1920 and these economists said, ‘Frozen food, if it comes out, will wipe out 95 percent of farmers, and it will destroy the American economy. The American economy can’t survive on frozen food,'” noted Lee, who gave his opinion on the current hysteria about AI unemployment. “Instead, it frees up time, right? It creates, it allows people to relocate, it creates a whole new workforce.”
To address concerns about an AI bubble, Li drew an analogy to the internet age. He points out that if investors had bought the “Internet Basket” in 1999 and held it today, they would have outperformed the S&P 500 even though most of the stocks in the basket fell to zero. Likewise, Lee estimates that while 90% of AI stocks may perform worse than expected, the sector as a basket is likely to outperform.
When asked directly about his reputation as a “perpetual bull,” Lee responded that he was first labeled that term in 2009 and that history has proven him right. “Here’s the funny thing 16 years later…the optimists won.”
He said betting on resilience is still the right thing to do, and if you look closely, that’s where the market will be heading into 2026. “America, as long as it’s a place of innovation — and we are, because we’re at the center of artificial intelligence — I think it’s very optimistic,” Lee said, while acknowledging a key point made by the show’s host: “This artificial intelligence has the potential to be a disaster for the labor market, and if it is, the United States will be the least optimistic.” Hurt, but everyone goes down. “