Here's the top reason US stocks aren't in bubble territory, according to Fundstrat's Tom Lee
- US stocks are not in bubble territory because 94% of retail inflows since 2008 have gone into bonds, not stocks, Fundstrat's Tom Lee highlighted in a note on Monday.
- Just $183 billion of retail money has flowed into the stock market since 2008, according to Lee.
- Visit Business Insider's homepage for more stories.
US stocks are set to perform "surprisingly well" over the next decade, in part because there is "no bubble in stocks," Fundstrat's Tom Lee said in a note on Monday.
Even after the S&P 500's 16% rally to record highs in 2020 during a global pandemic, investors are likely to see further gains in stocks because, since 2008, 94% of retail fund flows have gone into bonds, not stocks, Lee said.
Of the $3.1 trillion in retail fund inflows since 2008, just $183 billion, or 6%, went into the stock market. And in the past three years, fund flows into stocks have been weak, despite a nearly 70% surge in the S&P 500.
"Investors liquidated stocks at an accelerating pace since 2017," Lee said. In the past few months, he added, there has been a "small blip" of flows into the stock market, but "how can this 'blip' mark the top??!!"
Since 2008, investors have poured $936 billion into bond exchange-traded funds, $1.9 trillion into bond mutual funds, and $2 trillion into stock ETFs while pulling $1.9 trillion out of stock mutual funds, the note said.
"Again, I don't see how this marks even the proximity of a top for equities," Lee said.
