Episode summary
Tom Lee: Bear Market Coming in 2026 – Use It As Buying Opportunity
The Master Investor Podcast With Wilfred Frost
· · 50 min · Hosts: Wilfred Frost · Guests: Tom Lee
Summary
Tom Lee argued that 2026 should still sit inside the bull market that began in 2022, even if the year includes a sharp drawdown that will feel like a bear market. He said the correction could be 10%, 15% or 20%, driven by a new Fed, a more interventionist White House and continued uncertainty around how much AI optimism is already priced in. His message was that investors should not try to time that volatility: he expects the pullback to become a buying opportunity before markets finish the year strong.
He stayed constructive on the Magnificent 7, but said the more interesting trades are energy, basic materials, financials, cyclicals and small caps. He argued that lower rates, an improving ISM, and mean reversion after years of underperformance could help those sectors. On macro policy, he said tariff noise could unsettle markets, but that inflation is cooling enough to give the Fed cover to cut.
Lee also made a strong case for gold and crypto as alternative stores of value. He said gold remains underowned, with millennials rediscovering it and Tether possibly a major private buyer. On crypto, he framed Bitcoin as digital gold and said October’s deleveraging event was the main reason it lagged gold. He kept his $250,000 Bitcoin target and said Ethereum remains his preferred long-term crypto because Wall Street is building on its blockchain.
Key takeaways
- Lee expects 2026 to include a 10% to 20% market drawdown, but says it should be bought rather than sold.
- He still likes the Magnificent 7, but he says energy and basic materials are his top sector picks for 2026.
- Lee says the Fed has room to cut because underlying inflation is lower than the headline numbers suggest.
- He believes gold is still underowned, helped by geopolitical uncertainty, easing central banks and millennial demand.
- Lee keeps his Bitcoin target at $250,000 and says Ethereum is his preferred long-term crypto because Wall Street is building on it.
Notable quotes
“they should view the pullback as a chance to buy, not the pullback as a chance to to sell and and to avoid stocks”
“We still like the Mag 7 because we're confident of their earnings growth”
“this year, our top sector pick is energy and basic materials”
“Most people are at zero for gold. So that means gold is still underowned today”
“Bitcoin is digital gold, but the universe of people that believe that thesis is not the same universe that owns gold”
How the episode opens
I think the most important advice I can give people is that trying to time the market makes you an enemy of your future performance because a lot of investors always only want to buy at the bottom and they want to sell at the top. But when we look at the stock market and actually in crypto too um the only people who really make money are those who are investing for the long term. So as much as I'm warning about 2026 and the possibility of a lot of turbulence, they should view the pullback as a chance to buy, not the pullback as a chance to to sell and and to avoid stocks.
We still like the Mag 7 because we're confident of their earnings growth and so as long as they don't date, they should they should actually perform better than the market. But this year, our top sector pick is energy and basic materials. I think it means gold should be sitting in a portfolio.
I've seen folks like Ray Daily recommend up to 10%. I don't think
You said 15% on this podcast. Okay, so let's say it's 15. Most people are at zero for gold.
So that means gold is still underowned today. Crypto still has a I think future adoption curve that's higher than gold because more people own gold than own crypto. But the path to getting that adoption rate higher is going to be very jagged.
And and I think 2026 will be a really important test because if Bitcoin makes a new all-time high, we know that that deleveraging event is behind us.
And your price target for Bitcoin this year is 250,000. — Yeah. So we think uh Bitcoin will make a new high this year.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- bear market forecast 2026
- fed and policy shifts
- ai narrative repricing
- gold and crypto adoption
- bitcoin ethereum outlook
Companies and tickers mentioned
- Fundstrat Global Advisors
- Bitmine Immersion
- Fundstrat Capital
- Tether
- Beast Industries
Watch the episode
Watch “Tom Lee: Bear Market Coming in 2026 – Use It As Buying Opportunity” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Master Investor Podcast With Wilfred Frost, this episode and its artwork belong to Paradine Productions. Octagon is not affiliated with the show; this page is an independent summary.
