'The biggest reason to stay bullish is because of millennials': Fundstrat's Tom Lee sees the S&P 500 soaring 313% by 2029 (2024)

• The stock market is on track for a decade-long bull market driven by the rise of millennials, according to Fundstrat's Tom Lee.
• Lee said the S&P 500 could hit 19,349 by 2029 as the most populous American generation enters its prime earning years and forms families.
• Lee's sky-high price target for the S&P 500 represents potential upside of 313% and a CAGR of 20%.

While Fundstrat's Tom Lee has bullish expectations for 2022, forecasting a return of at least 11% for the S&P 500, it's his long-term outlook that is especially eye-popping.

In a presentation to clients on Tuesday, he outlined how millennials are set to fuel a decade-long bull market in stocks as America's most populous generation enters its peak earning years and begins to form families.

"The biggest reason to stay bullish is because of millennials," Lee explained, noting that stocks boomed when Baby Boomers and Generation X entered the age range of 30 to 50 years old.

He said the S&P 500 could surge to 19,349 by 2029, representing potential upside of 313% from current levels. A surge to that level would translate to a compounded annual growth rate of 20%, well above the stock market's historic average of between 7% and 10%.

Supporting Lee's bull thesis is the fact that many mega-cap companies today were founded by business leaders who were in their 30's at the time, including Costco, Home Depot, Cisco, and Oracle, among others. Additionally, US patent issuances tend to spike when the US sees a surge in its population of 30 to 50 year olds, indicating that innovation is strong.

The millennial generation overtook Baby Boomers in population size around 2015, and the most populous age in America right now is about 31 years old.

Lee follows demographics because they tend to serve as a leading indicator in identifying potential tops and bottoms in the stock market. He noted the number of adults between the age of 30 and 50 years old fell until 2008, as the Great Recession took hold. That age group is set to accelerate until 2026, and the number of millennials in that range won't decelerate until the early 2030's, according to Lee.

"Demographics of the US are turning into a tailwind right now...so we have this 14-year window ahead of us where we have a demographic tailwind...if this plays out we still have a very strong bull market ahead," he said.