These STOCKS will EXPLODEEE📈

All righty, let's get into Tom Lee here. Tom Lee makes a case for a year-end rally, helping us guide our investing viewers through election night. It was good having you. What do you make now? You've had a chance to digest a little bit of what's happened.

Yesterday was, you know, felt euphoric. Now what?

Well, yeah, first of all, Scott, thank you for having me on. Election night was historic, and I really enjoyed it. The move yesterday, 3%, the best move in the history of any post-election rally, I think needs to be respected because it really highlights one of two things, or both. One is that there was so much de-risking into that election. Actually, it was unusual; we actually fell two weeks into election day. That happens like about a third of the time.

The second is that animal spirits could be unleashed because of the interest and belief that there's deregulation and mergers and a pro-business environment. I think it's a very respectable move, and I think it sort of argues we have 5 to 10% upside into year-end.

At what point, though, do you get on board with Barry Bannister's idea that the train could be leaving the station, heading up, you know, full speed to Crazy Town?

Well, he's sort of structurally correct that, you know, this market top is not going to be because someone's going to have a problem with P/E or because a recession's going to happen. I think it's very likely, you know, in the next 6 months, the top is because either firepower is exhausted or expectations have become unhinged on markets. We can measure either; right? We can look at margin debt that's just been flat for the last 4 months. So the market's been up, and most investors have been de-risking. That's pretty... that's fuel for me, upside fuel.

When you look at sentiment readings, it's not extreme. In fact, the VIX was elevated and only normalized yesterday, so I don't think sentiment is extreme. Gosh, it was just, yeah, if this market really rolls heavy, you got a year-end rally. You got the Wall Streeters needing to play catch-up to the market, right?

And so that's going on. And then you get, you know, year-end you get into the new year, you get January, right? Everybody's excited—like, oh, Trump's about to take office, okay? And you get another rally there. After actually Trump gets in office, that's when I get a little concerned. Assuming we have a continued big year-end rally here, and then we have January optimism about the New Year, if we have that, then I actually start to get a bit concerned about the market, especially in late springtime and into summertime.

I think you could see a heavy "sell in May and go away," and it might even start in April or March at that point in time, right? And then I think it could be a rough summer. Now, during that rough summer, that could be a time period where, you know, Trump really goes after the Fed to really get lower interest rates, you know? Especially if the stock market starts to have troubles.

'Cause if he gets in office, and then shortly after he's in office—meaning within the first few months—the stock market starts to tank, he pays very close attention to the stock market. If you were around during his first term and investing in the market, you know that this man pays very close attention to what the financial markets are saying, what's going on in the stock market.

So all of a sudden, the stock market starts tanking shortly after he takes power, right? He's going to be putting that on the Fed. Right? And he's going to be after them left and right: "You guys need to lower rates! Need lower rates!" Right? The rates are way too high. People can't afford homes; they can't afford cars; this and that. Businesses can't afford to operate, and that would be a big area of volatility.

When I say volatility, I mean likely downtrending. 'Cause when things get rough like that and people get kind of caught off guard. But I only see that happening if we continue to really go risk-on in regards to this market. This next three months, November, December, January are bangers. I start to get concerned after that.

And so we'll see; we'll see how trends play out, but that's kind of my thoughts.

So we might actually be somewhat aligned in regards to that about the VIX. It's funny you went there; I'm staring right at it. I mean, it's down 30% on the week—just a full-blown collapse, right? Don't forget, we were above 20. I think we were at 22 at one point last week; we're barely above 15.

Yeah, it was actually very interesting to look at the VIX Futures curve. But on election day, the VIX Futures curve was over 20 all the way through August of next year. It should be around 15 or 16. The markets were pricing in tumult and uncertainty for like 9 months, 10 months. So I think there's a huge amount of de-risking taking place. I don't think people got their exposure yesterday and today.

I mean, look, I know you thought that we wouldn't know the outcome of the election for many weeks. I think that was your base case coming in. So I think there's a lot of surprise rethink as we look at where this market might be able to go.

On that note, we do have a new ETF, which I want to talk about. It's called the FunStrat Granny Shots U.S. Large Cap ETF. "Granny shots" being that you think these would be a little bit easier to make, right?

That's right. It's how you build it. There, we're talking about names. I hope that we show this. I think we have produced this up. Tesla, Goldman, JPM, Johnson Controls, Caterpillar, Emerson, TransDigm, Eaton, Oracle, Ingersoll—those are the top 10.

But how you build that, the Granny Shots ETF is really built upon the research model we used at FunStrat. That was a thematic core stock portfolio that we had been using since 2019. So for six consecutive years, it takes seven what we consider relevant market themes and finds the most correlated stock to those themes—whether it's AI, or Millennials, or Fed easing, or improving PMIs.

And then the stocks that appear most frequently across themes are our Granny Shots. The term "Granny Shots" is named after Hall of Famer Rick Barry's way of shooting free throws. Some of us do remember that!

We definitely do! Tesla is the number one stock; the weighting is 3.5%. Do you want to just talk about the move in that stock this week and what it means to you in the context of how you've built this and where you think it can go?

By the way, a lot of times, I've gotten so many messages from people over the years. So many people ask me, "Why don't you do an ETF, Jeremy? Why don't you do an ETF? Why not do an ETF?"

Right, and I've gotten that a lot. I'm not against doing that; it's just the timing's got to be right. And the timing is not right for me right now. Right now, I'm just really enjoying YouTube. I'm just really enjoying leading my private stock group. I'm just really enjoying building out THX Stocks.com and being very involved in that process.

So the timing is just not quite right in regards to me doing an ETF or hedge fund or something like that. Someday, that will be in play. Someday, that will be in the cards, but it's just the timing's got to be right.

I'm very meticulous about the timing being right, especially on big stuff like that. 'Cause if the timing is not right, then it can potentially mess up the whole deal. And so, you know, for instance, THX Stocks.com, that was something that I had thoughts about for a long, long time. Right? And the timing had to be right, and I had to know exactly what I was doing here, how I was going to approach everything, right?

And you know, have the right team members to help me build it out and things like that, and we did it right. But if I tried to do that a few years ago, it wouldn't have worked. I just know it wouldn't have worked.

So someday, I might go that ETF route or do the hedge fund route, but it's just not right now. And so just keep that in mind. I'm having a lot of fun on YouTube, having a lot of fun with the private stock group, and having a lot of fun with THX and building that out. So, yeah, someday it might be in the cards, but it's just not right to do it right now—that's the bottom line there.

Yes, Tesla has, in our research product, been appearing since inception, since 2019, because that company has a hidden asset, which is its AI and intellectual property. And now, of course, the intellectual property built around all this infrastructure they own. So it's a company that to us looks undervalued, because people look at it as a car maker and look at current margins and earnings.

But as we know, there's a lot of new initiatives—whether it's Robo Taxi and, you know, robots. And now, of course, there is a political angle that you guys have well discussed, and I think it can only help Tesla.

Tom F, well, we'll talk to you soon. Appreciate you. It's Tom Lee, FunStrat.

Hey, it's Jeremy. I hope you really enjoyed that clip here today. Listen, there are three main areas a long-term investor has to understand. You have to understand financial statements: income statements, balance sheets, cash flows. You have to understand and master portfolio management, and you have to have the ability to project what is possible for companies in the coming years—bearish scenarios, bullish scenarios.

All these skills can be learned, and that's the good news. I'm still just a regular guy who's out here; I just have a lot of passion for the market. I've learned a lot over the last 15 years; I had a tremendous amount of success, and I have a dedication to teaching people everything I have learned in the past 15 years. If I can do it, you can do it too!

You can learn all that's required to become a great investor in my private group. The application is going to be down there in the description area. You can click on that—fill out an application, join us in the private group, get access to all my best course curriculums teaching you everything that I got in my head, and you get the ability to join our six-figure, seven-figure Hall of Fame.

We have such a tremendous Discord; it is incredible. So once again, description area down there—there's a link you can apply to join my private group in there.

So it was about 5 or 6 days ago on the channel that I did a video called "The Stock Market is About to Go Nuclear." Right? In that video, I laid out the whole process on essentially what's going to be transpiring in the stock market from here.

Right? And I'd been talking about that in videos for honestly weeks at that point in time, maybe even a month or two. But I wanted to just do a full video so that people could really understand everything that's going on there, and just really focus that video just on that, right?

If you're wondering, does the stock market still have room for upside ahead? Here's what we're looking at as of the latest data: there's over $6.5 trillion in money market funds. They're estimating well over $25 trillion just from retail and institutions—near $4 trillion. Absolutely shocking numbers.

So there's been a lot of money that has not wanted to go in the stock market. It's not wanting to go there because, one, you can get basically a guaranteed 4-5% in treasuries and savings accounts, CD accounts—those sorts of things, right? So people are like, "I don't really want to take the risk."

And also, the other factor is a lot of people haven't been that happy with the economy, so they haven't felt great about investing in the stock market. Right? They say, "I don't know about things; I'd rather just be in treasuries. Rather just be in savings accounts, rather just be in CD accounts. I'm not sure about what's going on in D.C. I'm not sure about what's going on with the consumer."

All those sorts of things. So a lot of people just haven't been interested in buying stocks really since 2022, in the epic fall of 2022. Now those of us that stayed in the market have prospered. If we were to go back, the public account today is at an all-time high—well over $2.6 million.

If we go back to about two years ago, the public account was right around a million dollars, roughly, right? And at the lows, I think it got down to $984,000, and now it's over $2.6 million. Right? And that's on minimal deposits over that amount of time—like very small deposits.

And so it's been incredible for us that stayed in the market, but a lot of people, we got to understand, have not wanted to piece this market. They left the market in 2022 and said, “Peace out! When I feel like things in the country are changing for the positive, I’ll get back in the market, but until then, don’t talk to me. I’ll go ahead and sit over here and collect my 4-5% guaranteed,” right?

And so that’s a decision certainly people made; it was the wrong decision, let’s just call it the way it is. It was the worst decision they could have made because they just missed out on so many easy stocks to make 100% gains, 200%, 500%, 700%, 1000%—like, we’re talking about these aren't hidden stocks.

Meta, imagine just buying Meta two years ago; today, Nvidia—buy Nvidia two years ago, today, and look at the gains these stocks have—right in front of your face.

So, but the moral of the story is a lot of people haven't wanted to play this game for the last couple of years, right? Now, I always reacted to videos all the time on the reaction channel. If you guys don't know, I have a reaction channel; it's called "Jeremy Leabe Makes Money." Sometimes I react to articles; a lot of times I react to videos. It can be clips from CNBC; it could be some sort of clip from Bloomberg or just other outlets and things like that, right?

And many times, I'm reacting to these videos, and so I get a chance to see what the Wall Streeters are talking about. 'Cause Bloomberg, CNBC, they have all these Wall Streeters on—analysts of stocks, all these folks that want to run hedge funds and other types of mutual funds and all these different things, right? Actively managed ETFs.

And so I get to get a really good insight on what these folks are thinking, right? And I love having that channel. I think starting that channel was one of the best ideas I’ve had in honestly the last several years because I love to hear where they're positioning—not because I'm looking to follow them; if anything, I'm looking to go the opposite way of them.

But what have I heard countless times from these Wall Streeters for the past, let's say, the last two to three months? "Be cautious! The market's going to downdraft into the election. Maybe we rally after the election, but you don't want any part of the market August, September, October."

Right? And especially at that beginning of August when we had the Japanese carry trade situation happen. Oh man, that went South quick. And then people are like, "Don't touch this market!"

And I even took this screenshot; I still have it on my iPad. I took that screenshot September 3rd because that morning of September 3rd, Tom Lee, who's seen as one of the biggest bulls in the stock market, right? One of the biggest bulls.

He goes out there on CNBC, and he says investors should be cautious in the next eight weeks. And when the biggest bull comes out and says, "You better watch out; you better not cry," people say, "Oh boy, button up the hatches!" Right?

And the stock market sold off heavy actually that morning of September 3rd, right? And then you can look at the stock market ever since then, and it's been up and up and up and up and up and up and up, right?

But that's what a lot of people felt. So a lot of people are like, "You know what? I don't want a part of the stock market." So a lot of weak hands sold in that early August time frame, right? And they said, "I don't want any part of this market!" So they sold out, and now those folks are like, "What am I going to do?"

Right? You guys remember this was just three months ago. I think I reacted to this video on the reaction channel, if I recall at the time, right? The professor Jeremy Siegel, he went on CNBC, and he says the Fed needs to make emergency rate cuts. He was freaking out, right? He was like, "They need cuts—emergency cuts, substantial cuts, right now!"

He was flipping out! Oh my God! So you had some people straight up panicking, right? Straight up panicking about what was going on. Then you had other people saying, "You know, be very careful; be very cautious in this market."

Meanwhile, I'm looking out there, and I'm saying, like, everything was lining up to be more bullish, if anything, rather than on a bear side.

I mean, what's happened over the past three months? The inflation problem is completely done. Like, inflation's been done really for like six months now. You couldn't really make a debate about it. But for the last three months especially, like inflation's gone; it's not a problem anymore. We're at like a 2% CPI now at this point in time, right?

The Fed has entered a cutting cycle; there's not like a debate like, "Oh, the Fed going to cut?" No! They’re in a cutting cycle now at this point in time, right? They made their first cuts a couple months ago. Employment markets held up tremendously strong; we're still at 4% range for unemployment. We’ll take that any day of the week.

The U.S. economy can have 4% unemployment; we will gladly take that, right? The odds of Trump winning the election started going up and up and up. And if anybody that, in my opinion, wasn't biased and could just look at it objectively could figure out, "Like, Trump's going to win this election," right?

And then big tech earnings came out; those were insanely strong. Why does that matter? Well, big tech is the ones who run the market. Look at the biggest weighting in the NASDAQ; look at the biggest weightings in the S&P 500. What are they? Big tech companies, right?

Additionally, you have real wages coming back very strong now at this point in time because inflation's finally chilled. But meanwhile, wages are still much stronger than where CPI is at, right?

So let's get this right: inflation problem done. Is that bullish or bearish? That's bullish!

Fed entering a cutting cycle, but they're not cutting because unemployment is skyrocketing, right? That's bullish! They're cutting because the Fed funds rate is too high based upon where CPI is at right now and the employment market being in the form—is that bullish or bearish? That's bullish!

If you want to look at it, most people would look at it as Trump winning the election being bullish for stocks, bullish for the economy, right? Big tech earnings strong? That's very bullish! And real wages coming back strong? That's very bullish for the consumer for 2025, right?

In 2026, so you add up all those things, and at the end of the day, if you're wondering, can the market boom continue? It could easily continue. I can give you 6.5 trillion reasons why the stock market boom could continue on here, right?

There's a lot of people that are not positioned in this market, right? And they're going to look at this market, and I think it's—given this backdrop, I think it's going to be very difficult for people to still stay on the sidelines and say, "I don't want to buy." Because they're looking and like, "Where's the big crash coming from?"

Is the Fed magically just going to start raising rates again to crash the stock market? No! They're in a cut cycle! Is inflation just going to magically go out of control in the next 6 to 12 months? No! Maybe 2 years from now; it's a different story. Maybe 3 years from now, but not the next 6 to 12 months.

Is the employment market going to magically break, and the unemployment rate going to go to 8-10% all of a sudden? That's not very realistic here in the next 6 to 12 months. You know, if you’re somebody that likes Trump and you like his economic policies, I think it's very hard to stay on the sidelines now.

And if you care about the stocks that run the market, those earnings are incredibly strong. Look at Meta's earnings, right? Watch Nvidia's next earnings report; get ready to have your flapjacks flipped. Look at these companies one after another. Even Apple—the sleepy Apple—still had a respectable earnings report.

And you got real wages coming back strong! Like, what is there to really be, let's say, bearish about for the next six to twelve months? You don't really have much. So with all that money out there, it’s hard to not see a good amount of that money flowing into the market over the next few months, right?

Now, what about what stocks are trailing in this market versus the stocks that actually have huge upside ahead? Right? Because I'm seeing people already kind of get trapped into some stocks that maybe don't have the most upside when there are other opportunities out there that have immense upside.

Well, right, Tesla here today—Tesla's up massively. Everybody sees it. Tesla's stock is up over 14%! 14% here today! I mean, as a Tesla shareholder, I love this! I mean, we love this! I gladly, gladly, gladly take a 14% move. That's a $446,000 move for me today, up in the public account just based upon Tesla shares, right?

So there is a massive amount of excitement around Tesla stock here today, right? It's apparent in that price move, right? Over $100 billion of market capitalization has been added to Tesla stock here today.

And there's a few reasons for why this is happening. One is there's a belief—especially since Elon Musk is obviously tied up to Trump over the past, you know, six months or so—that Trump is basically going to make it much easier for Tesla to be allowed to drive themselves, okay?

And so there's not as much fear from the regulatory side in regards to that. So that might be a belief, and that might be true; I don't know. We'll see when Trump's actually in office, which he's not in office for still several months from now, right?

But there's a belief like, "Oh, regulation—that's going to help Tesla in regards to that!" Right? Second thing is China—Mexico. So there are worries or concerns about the Chinese EV makers making EVs in Mexico and then flooding the U.S. market with that, right, and really devastating Tesla and other automakers in general.

Right now, that Trump is in office, there's a—there’s, you know, seen as an extremely low probability. And by the way, I think there was an extremely low probability whether Trump was in office or not, but some people had a fear about that. So now you take that out of the market, right?

And then additionally, Trump's going to likely put a lot of pressure in 2025 on Jerome Powell to lower rates substantially—especially if the Fed's not moving as fast as Trump wants the Fed to move rates down—then I think he's going to put a lot of pressure.

And so lower rates ultimately mean, you know, a lot more people might be able to afford Teslas, right? So that could be seen as all positives. And so people are jacked up, and they jacked the market cap up by over a hundred billion dollars here today—over a hundred billion, right?

On the back of this! But the thing you got to understand about this is, are these things that are going to change Tesla's financials in any substantial way in the next couple of years?

Right? No! No, that's not changing Tesla's financials in the next several years! Honestly! And even when Tesla does have their Robo taxi fleet out there—which that might still be two, four, six years away—the revenues are going to be extremely small compared to Tesla's overall base.

Like, if you look at Uber's revenues versus Tesla, you're going to see exactly what I mean! Uber is just like a massive Goliath company, right? You think about them giving rides everywhere and still compare Uber revenues to Tesla, and you’ll start to realize, “Oh dang! Like, it’s not as exciting as people think.”

It can be a big profit generator for the company whenever it gets scaled up, which the scale of that is still like 5, 10 years away. So Robo taxis, in terms of big fleets out there, you're still several years away from that in terms of being a big profit driver for Tesla. You're still 5-10 years away from that, right?

So none of these two are changing Tesla's financials! If you're thinking like, "Oh, Tesla's massive growth is just going to be back overnight!" As a Tesla shareholder and somebody that's been investing in this company since the dark days of bankruptcy talks, right?

Guess what? Like, that's not magically changing! Now, if he gets Jerome Powell to lower rates substantially—really, really quickly—that can help out Tesla's business model, sure! But it's not as good as it seems.

And here's why. If you have been paying attention to the Tesla story, you'll understand that Tesla has been offering ridiculously low interest rates. In some situations, I've seen even like some zero APRs; like, it's ridiculous!

And so just understand that interest rates going lower is not going to help Tesla nearly as much as you think it's going to help Tesla, if you've really been paying attention to the rates they've been offering this year and in 2024, right?

So it can help, but it's just not like, "Oh my gosh, this is like a night and day difference!" No, no, no! So the main reasons everybody's getting all jacked up here—I'm just here to tell you as a Tesla shareholder and somebody that knows this company inside out—it's not as exciting as it might seem.

But the market's taken that, right? And so Tesla, you know, if we run a little valuation model here on THX Stocks.com, right?

So let's assume Tesla can get back to 20% revenue growth—which would be very strong, good revenue growth from the company. And they can average from 2025 to 2028 20% a year, every year. Net income could expand even faster.

So, you know, which I think net income for Tesla will expand faster than revenues, being that they can always figure out how to bring down cost of manufacturing. Additionally, they're getting heavier and heavier services over the coming years, right?

So I could see net income growth of 30% if they're doing 20% top-line growth, right? So, you know, 20% top line, 30% bottom line—you could probably command a 50 to 80 PE ratio for Tesla if you're growing at those sorts of growth rates, right?

Where's a compound annual growth? Basically, you're getting no growth really in the stock for the next several years. And if we go all the way out to 2028, you get 1% CAGR on the low end, 10% CAGR on the high end, right? That's not the—it's not the most exciting opportunity.

Now in order for Tesla to actually be a great performing stock, we're going to have to get the major growth days back. When I'm talking about major growth, I'm talking about revenue growth of 30% plus year in and year out, right?

So 30% type growth in 2025—do I think they're going to grow revenue 30% in 2025? Probably not. I think they could grow 20% in 2025; I think maybe even 25% in 2025. But in terms of 30%, I think that's going to be really difficult.

Same thing for all these years—to be quite frank. Like, I'm kind of thinking about Tesla's more in the 20% to 25% type growth numbers, right? And net income growth of 30% to 35% on average per year.

But if we want to get really bullish and say 30% revenue growth, 45% net income growth, if they're doing those sorts of numbers, the company can probably command a 60 to a 90 PE ratio, which then gives you a compounded annual growth rate on the low end of about 18%, on the high end of about 31%. So there you go!

But, you know, you don't want to necessarily be banking that Tesla is going to get back to the unbelievable ridiculous growth rates. I wouldn't bank on that, right? I would kind of be thinking about Tesla more in a 15% to 25% revenue growth and kind of the 25% to 35% earnings per share growth, right?

Which makes it great as somebody that holds a stock, but for somebody that's, you know, flushing in money thinking you're going to make crazy gains past 2025, you know, be a little careful when it comes to that, right?