TOM LEE SAYS THIS IS A FALSE FLAG! IT'S COMING!

Introduction to Tom Lee's Market Analysis

Tom Lee discusses the current market situation, focusing on small caps, risk-on assets, and the higher interest rate environment. He believes the rise in yields could be a false flag and expects them to fall in the next few months.

Small Caps Analysis

• Tom Lee thinks small caps will perform well in 2025 due to an incoming pro-business administration and potential for mergers.
• He notes small caps have underperformed the S&P for the last 10 years but are currently more attractively valued.
• The median P/E for small caps is around 11 times, almost 7.7 turns cheaper than the S&P.

Riskier Assets and Quantum Computing

• Tom Lee suggests investors should take a long-term view on megatrends like quantum computing.
• He believes it's too early to judge the adoption rate of quantum computing and notes that such innovative technologies are typically high-volatility names.

Personal Analysis of Small Caps

• The speaker looked at the top holdings of a small cap ETF (Russell 2000) and was unimpressed by the quality of companies.
• Many of these companies had inconsistent cash flow, profitability, and lacked growing revenue.
• In comparison, large-cap companies like Microsoft, Apple, and Google have strong financials, wide moats, and are less affected by interest rate changes.

Conclusion and Bitcoin

• The speaker is cautious about small caps in a higher interest rate environment due to their financial position and risk.
• Bitcoin's performance is seen as less correlated with interest rates, with its adoption being a key driver.
• There's speculation about a potential strategic Bitcoin reserve, which could impact its price.