Fundstrat co-founder Tom Lee made an extremely bullish prediction for the U.S. stock market last month: the S&P 500 Index (SPX) is expected to nearly triple by 2030. This prediction has attracted widespread attention. He has become famous for accurately predicting the rise of U.S. stocks since last year and has earned the title of "Wall Street's God of Calculation."

Lee said in an interview with Bloomberg's "Odd Lots" that he expects the S&P 500 to top 15,000 by the end of the decade. The index was trading around 5,630 on Friday.

“If this is a normal cycle, then as the demographics change ... the S&P 500 should probably be at 15,000 by the end of the decade,” Lee said. “To me, when you get into a longer time frame, I think the market is probably headed in that direction.”

During the interview, Lee shared four charts that show why this already optimistic forecaster remains so bullish on the stock market.

1. Thanks to the Millennials

Lee created the following chart a few years ago, but his point remains the same. The average age of a millennial is currently around 31, and 2.5 billion people around the world are beginning to enter the prime 30-50 age group.

He said, "This will be the third time that the U.S. stock market has entered a cycle with an annual compound return rate of more than ten times. The first was the roaring 20s of the last century, then from the 1950s to the late 1960s, and the current cycle is the third."

“These cycles have all coincided with a surge in the number of people aged 30-50, in other words, prime-age adults, and this time it’s been driven by millennials and Gen Z,” he added.

Lee is describing a story about demand. “The Urban Institute data shows that when people enter their prime years, 30 to 50, they start borrowing more money and making big life decisions, and that’s where the economy is driven,” he said.

2. Stock market peaks and demographics

Historically, the stock market has peaked when the population reaches its mid-50s because they are closer to retirement and typically have less money to spend.

For example, when the Greatest Generation reached prime age in 1930, it coincided with a multi-year bear market in stocks. Fast forward to 1974, when the Silent Generation reached prime age, it coincided with a painful, multi-year correction of around 35% in the stock market. The prime age population of the Baby Boomers peaked in 1999, the year before the multi-year bear market in stocks.

Lee said that based on the average age of millennials, they will not reach peak adulthood until 2038, which suggests that the stock market has a lot of room to rise between now and then.

3. Technology will solve the global labor shortage problem

Lee believes technology spending will surge in the coming years as the world faces a growing labor shortage.

“AI is creating a huge opportunity for U.S. tech companies because there’s a global labor shortage and AI is providing the world with a digital workforce,” he said. “So those two forces combined, I think, are going to power the great returns for stocks over the last decade.”

In Li's view, a lot of dollars will be spent on American technology products in the future, because by the end of this decade, the world will be short of 80 million workers, which means that about $3 trillion in labor wages will be converted into technology spending, that is, $3 trillion in revenue for American technology companies and artificial intelligence suppliers.

4. Funds will flow into US technology stocks

Lee noted that as more companies invest trillions of dollars in technology to address global labor shortages, it will increase the tech sector's share of the S&P 500 to 50%, up from about 30% currently.

"If U.S. corporate earnings grow at this rate, the price-to-earnings ratio of U.S. stocks should rise. Capital will flow into the United States. Where else in the world can you find the best and most important technology companies? They are basically in the United States," said Li.

Article forwarded from: Jinshi Data