In an era increasingly characterized by geopolitical turbulence and economic uncertainties, the optimism of long-term market bulls like Tom Lee is both refreshing and perilous. Lee’s recent emphasis on sovereign security as a pivotal theme for his Fundstrat Granny Shots ETF hints at a broader paradigm shift—one where national borders and state-backed resilience become the bedrock of corporate strategy. This perspective, while seemingly strategic, reflects a potentially dangerous overreliance on the illusion of sovereign strength that may not withstand the full ferocity of emerging global crises.
By focusing on the notion that companies will realign their supply chains within national borders, Lee underscores a fundamental misunderstanding of the globalized economy. While reshoring efforts are undoubtedly gaining momentum, they remain a complex, costly, and often inefficient response to geopolitical pressures. Rigid adherence to sovereign-centric supply models risks creating inefficiencies that could hamper economic growth, especially if over-implemented as a blanket solution rather than a nuanced approach. If policymakers and market participants dismiss the interconnectedness that has historically fueled innovation and competitiveness, they risk sacrificing the very productivity they seek to protect.
Furthermore, this shift toward sovereign security may lead to fragmented markets, erecting economic barriers that stifle international cooperation and innovation. The early signs of decoupling between major economies could exacerbate inflation, increase costs, and hamper technological progress. Investors should be wary of the romanticized notion that national borders can contain and fix global supply chain fragility. Instead, true resilience lies in diversification, technological innovation, and smart geopolitical engagement—not in retreating behind walls that invite stagnation and inefficiency.
Gen Z and the Future Market: An Overhyped Trend or Genuine Revolution?
Equally problematic is Lee’s latest focus on younger generations, specifically Gen Z, as the demographic drivers of future markets. While it’s undeniable that new cohorts influence consumption patterns and workforce dynamics, placing excessive faith in youth as the ultimate market engines could be a shortsighted oversimplification. Millennials, often heralded as the groundbreaking “engine” of late 2010s markets, are now aging into their prime earning years, but their influence remains undeniably overstated if viewed through a narrow lens.
Targeting Gen Z and Alpha prematurely assuming they are destined to replace old market drivers overlooks the volatility and unpredictability of generational values, preferences, and economic circumstances. Millennials disrupted traditional industries through technology adoption, but their impact was also shaped by specific historical factors—such as the Great Recession—that are unlikely to repeat. Playing a similar game with Gen Z risks overestimating a cohort that is still largely in developmental phases of career buildup and wealth accumulation.
Moreover, Lee’s emphasis on future demographic shifts may serve as a convenient narrative for fund strategists rather than a robust investment thesis. Historical data suggests that demographic shifts rarely impact markets in linear or predictable ways—especially when compounded by technological disruptions, regulatory changes, and geopolitical upheavals. Investing based solely on the assumption of inevitable youth-led growth channels could leave investors exposed to significant downside if these younger cohorts fail to fulfill their projected economic potential.
Skepticism Toward Thematic Investing and Active Management Trends
The success of the Granny Shots ETF—taking advantage of thematic investing—may be more a reflection of current market sentiment than a sustainable strategy. While active management, combined with targeted themes, can outperform passive benchmarks temporarily, it often falters over the long term once market conditions shift or investor enthusiasm wanes.
Lee’s theory of “hanging one’s hat” on the best stocks within prominent themes ignores the reality that markets are inherently unpredictable and often driven by factors outside thematic narratives. The ETF’s recent outperformance, while commendable, shouldn’t lull investors into overconfidence. It’s vital to recognize that thematic investing tends to be cyclical, susceptible to hype, and prone to sudden reversals when dominant trends turn out to be less impactful than anticipated.
Moreover, the focus on high ROIC and earnings quality as criteria for stock selection remains superficial if the foundational themes—sovereign security, youth market dominance—are themselves flawed or exaggerated. With active management gaining traction, investors should remain skeptical of strategies that depend heavily on short-term thematic predictions. True resilience in portfolio construction often comes from diversification and a cautious approach to shifting trends rather than chasing the latest hot theme.
Final Thoughts: Embracing Reality Over Fantasies of Control
While some of Lee’s thematic strategies have drawn favorable attention, investors must critically evaluate the foundational assumptions behind them. The allure of sovereign security and demographic determinism may tempt strategists to paint an overly optimistic picture of the future, but the reality remains far more complex. Trade wars, technological revolutions, geopolitical conflicts, and economic shocks will continue to shape markets in unpredictable ways—far beyond the neat narratives of borders and youth.
Long-term investors should be cautious of this trend-driven mentality and recognize that true market resilience depends on adaptability, not ideological fixation on sovereignty or demographic predetermination. While active, thematically focused ETFs can generate attractive short-term gains, they risk becoming victims of their own hype once the market realities challenge their core premises. In today’s volatile world, the best strategy remains a skeptical eye, a diversified portfolio, and a readiness to adapt rather than cling to simplistic narratives of national borders and generational inevitability.