Wall Street's biggest bull reveals what investors got wrong this year - and what's ahead for stocks and crypto

By Isabel Wang

Tom Lee of Fundstrat and BitMine lands on the MarketWatch 25 list of people who are reshaping how we live, work, spend, save and invest

Tom Lee has been dismissed for years as overly optimistic - but much to his critics' frustration, he's often correct.

When Wall Street warned of caution, he told investors to buy. When crypto lost its shine, he called for bitcoin at $100,000. When ether was left for dead, he said it was still in a "super cycle."

For years, Tom Lee, Wall Street's most vocal bull, has been dismissed as overly optimistic by critics. Much to their frustration, he has often turned out to be correct.

Now, in a year that has been great for just about every asset - U.S. stocks, foreign stocks, bonds, crypto and gold - Lee remains upbeat.

As the co-founder of research firm Fundstrat Global Advisors and chair of BitMine Immersion Technologies Inc. (BMNR), Lee - best known for his bold yet accurate market calls - once again cemented his reputation as one of the most prescient and influential figures on Wall Street in 2025, even following a major drop in BitMine's stock. More than anything else, Lee has championed for people to remain invested in stocks and other risk assets. He lands on the MarketWatch 25 list of people who are reshaping how we live, work, spend, save and invest.

In a recent interview with MarketWatch, Lee laid out what he thinks investors have misread about the market so far this year, predicted more upside for stocks, shared his skepticism about the idea that there is an artificial-intelligence bubble, and discussed his bullish outlook for crypto.

In 2025, what investors got most wrong, according to Lee, was viewing President Donald Trump's policies as "uncertain and unpredictable," and believing that they would hurt the stock market. Lee said investors particularly misunderstood the so-called liberation day of April 2, when Trump's announcement of sweeping tariffs stoked fears that an escalating trade war could lead to the rise of inflation and a recession in the world's largest economy.

"That period where the markets fell sharply should have been used as a time for people to buy the pullback, but many instead became structurally bearish, and they missed one of the biggest opportunities over the last five years," Lee said. "I'd say that was the biggest mistake people made this year."

U.S. stocks staged a surprisingly swift and strong comeback even after the sharp post-April 2 selloff that briefly pushed major indexes into or near bear-market territory. By the end of May, all three benchmark indexes had clawed back their losses after Trump paused higher targeted tariffs on most countries for 90 days, a reversal in his trade war that sent markets reeling.

To be sure, the high level of volatility can make buying stocks - or deciding when to buy the dip - challenging for many investors. But those who did were rewarded with higher returns this year, as the stock market's sharp recovery once again favored those who stayed the course.

Stocks have been riding a seemingly relentless record-setting rally ever since, with the S&P 500 SPX up 35% from its April 8 low as of early November, while the Dow Jones Industrial Average DJIA has advanced 25% and the Nasdaq Composite COMP has surged over 50% in the same period, according to FactSet data.

Lee also said investors have become "too sensitive" to fears of rising inflation resulting from tariffs and have tended to "hyper-react," while the Federal Reserve is treating it as "arguably transitory" - allowing markets to look past the short-term risks of spiking inflation.

"Just because there's a pickup in inflation, it doesn't mean the Fed has to be that structural," Lee said, adding that this misperception has kept many investors from turning bullish even though the Fed resumed cutting interest rates in September.

U.S. inflation has remained elevated so far this year, with consumer prices increasing 3% in September from a year earlier. That was the highest level since January and up from 2.9% in August. Excluding volatile food and energy prices, core inflation also rose 3%, according to the Labor Department.

The Fed's dual mandate - achieving price stability and maximum employment - requires careful balancing, as inflation and labor-market conditions usually diverge. In fact, the U.S. economy is currently grappling with both a cooling labor market and stubborn price growth, a difficult scenario for policy makers to navigate - though there has been a growing shift in focus toward employment risks.

Stocks have more upside through year-end

Even after a nearly 16% year-to-date rally, Lee and his team still expect the S&P 500 - and stocks more broadly - to keep climbing through the end of the year. He points to favorable seasonality in the stock market and to the Fed's continued monetary easing as key tailwinds that could keep the rally going.

The fourth quarter of the year has historically been the best for U.S. stocks, with the S&P 500 seeing positive returns 80% of the time and an average gain of 4.2% dating back to 1950, according to data compiled by the Carson Group. Meanwhile, a strong first nine months of the year usually points to more gains in the last three.

The Fed in late October voted to lower the target range for the federal-funds rate by a quarter of a percentage point, to a range of 3.75% to 4%, and officially announced its plan to stop shrinking its portfolio of assets beginning Dec. 1. However, Fed Chair Jerome Powell cautioned investors against assuming another rate reduction will follow in December, saying that it's "not a foregone conclusion."

As a result, investors have scaled back expectations for a December rate cut, with fed-funds futures traders pricing in 72% chance of a rate reduction next month, down from 90% before the October policy meeting, according to the CME FedWatch Tool.

Lee also said average negative sentiment in the stock market could act as a tailwind for equities, creating opportunities for those willing to take a contrarian stance.

"Market sentiment has averaged negative this year, and the average bull-versus-bear spread is negative 11.7 so far in 2025. The only other times you see double-digit average sentiment readings are in bear markets, so that's proof that investors are so skeptical of this bull market that they stay staunchly bearish," he said.

Investor sentiment is usually considered a contrarian indicator for the stock market, suggesting that it may be a good time to go in the opposite direction of the herd. Extreme bullishness often precedes downward movement in the stock market; conversely, extreme bearish sentiment could be a cue to buy.

Yet stock-market sentiment is not at a bearish or bullish extreme at the moment. Individual investors' bullish sentiment was actually rising, according to a recent survey conducted by the American Association of Individual Investors.

From the archive: He called the 2023 stock-market rally. Here's what Wall Street's biggest bull sees for the second half.

Lee's strong track record traces back to the pandemic. As COVID-19 became a global health crisis in March 2020, sending the stock market tumbling, Lee advised his clients to buy stocks. He correctly predicted a sharp rebound. While many of his peers were predicting a recession or a continued stock-market downturn after 2022 went into the books as an exceptionally brutal year, he was one of the very few Wall Street strategists to correctly call the 2023 bull market. It turned out to have marked the start of an unusually strong rally that has just reached its three-year mark.

He now sees the S&P 500 potentially ending the year at around 7,000, suggesting additional upside of 4% from Nov. 7's closing level of 6,728.80

Fears of an AI bubble and crypto crash

The robust stock-market rally this year, boosted by a dizzying AI frenzy, has prompted many to sound the alarm on a possible bubble. However, by drawing a parallel to the dot-com era, Lee thinks that Nvidia Corp.'s (NVDA) valuation looks "far less demanding" than Cisco Systems Inc.'s (CSCO) was at its dot-com peak.

Cisco's forward price-to-earnings multiple surpassed 131 in March 2000, while AI darling Nvidia was trading at forward P/E of 30.43 as of Nov. 7, according to FactSet. Last month, Nvidia became the first-ever $5 trillion company, according to Dow Jones Market Data.

"I'm in a camp that, of course, it's better for valuations to be lower. But I'm not in the camp that, because the market is expensive, there's no upside left," he said. "You're never in a bubble when everyone says you're in a bubble."

Beyond macroeconomic markets, Lee's crypto insights continue to set him apart.

Years before crypto went mainstream, he carved out a reputation as one of Wall Street's earliest and most vocal bitcoin (BTCUSD) bulls, providing formal research on the world's leading cryptocurrency to clients while others were still dismissing it as a fad.

Now, in a full-circle moment, Lee has stepped beyond the analyst's desk and into the arena, becoming a crypto executive himself in 2025 - allowing him to benefit directly from crypto's rise.

Lee took the helm as chair of BitMine Immersion Technologies in June, guiding the publicly traded bitcoin-mining firm toward a broader crypto strategy that now includes buying ether (ETHUSD).

With total ether holdings of 3.5 million tokens, and total crypto and cash holdings worth $13.2 billion, BitMine is, as of Nov. 10, the largest institutional holder of ether and the second-largest crypto-treasury company after Strategy Inc. (MSTR), according to a press release.

These substantial holdings accounted for approximately 2.9% of ether's total circulating supply, according to BitMine, and the company has stated its long-term goal of acquiring 5% of all ether in circulation.

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11-10-25 1401ET