A new historical record for the S&P 500? Fundstrat Opinion

Fundstrat's Tom Lee detailed his predictions for the stock market's growth potential through the end of this decade in a recent interview with the Odd Lots podcast on Bloomberg. He highlighted several factors that strongly support his forecast.

First, he envisions a significant increase in the value of the S&P 500 index, predicting that it could reach around 15,000 by 2030, a 175% increase from current levels. Recall that the S&P 500 is the name of the American index, which includes the 500 largest U.S. companies by capitalization. These companies include such global giants as Apple, Microsoft and Exxon.

While the market can grow by 175%, InvestingPro's artificial intelligence-based investment strategies outperform this figure. From 2013 to the present, the Outperform S&P 500 strategy has performed +1052% compared to +270% for the underlying index. Fundstrat's forecast is based on the expected continued growth in corporate earnings and the anticipated annual growth in stock prices. Lee attributes this earnings growth to an increase in market valuation multiples, attributing it to increased investor confidence following the COVID-19 pandemic.

In his view, companies have demonstrated an increased ability to adapt and effectively manage earnings even in a challenging environment, justifying higher valuations. In addition, he noted the impact of several themes on the market, including the growing interest of millennials and the global labor shortage. He predicts that the changing preferences of millennials and their growing adoption of financial technology will have a significant impact on the economy and financial markets. At the same time, he believes the global labor shortage will particularly impact tech stocks.

Back in 2022, Tom Lee predicted a 20% increase in the S&P 500 Index to 4,750 points in 2023. His prediction came true as early as December 28 of that year, when the index reached 4783 points.

Who is a member of the S&P? Top 10

1. Apple Inc. (AAPL)
2. Microsoft Corporation (MSFT)
3. Amazon.com, Inc. (AMZN)
4. Alphabet Inc. (GOOGL) - Class A shares
5. Alphabet Inc. (GOOG) - Class C shares
6. NVIDIA Corporation (NVDA)
7. Tesla, Inc. (TSLA)
8. Meta Platforms, Inc. (META)
9. Berkshire Hathaway Inc. (BRK.B)
10. UnitedHealth Group Incorporated (UNH)

Why is the S&P index important to everyone?

The S&P 500 Index is important even to ordinary people because it serves as a key barometer of the overall health of the U.S. economy and stock market. Because the index includes the 500 largest publicly traded U.S. companies, including major corporations such as Apple, Microsoft, and Exxon, its performance reflects the economic activity and financial health of a wide range of industries. For ordinary investors, the S&P 500 provides a useful benchmark for tracking investment performance and a reliable yardstick against which to evaluate their own portfolios. In addition, many pension and investment funds are heavily invested in S&P 500 companies, meaning that their growth can have a direct impact on personal financial well-being and future security.