What does Shaquille O’Neal’s underwhelming ability to shoot free throws have to do with your ability to pick stocks? Everything, says Tom Lee, Fundstrat’s Global Advisors Managing Partner & Head of Research.
Lee joined Yahoo Finance’s On The Move to talk about the “granny shots” stock-picking strategy which gets its name from the under-handed free throw technique popularized by NBA Hall of Famer Rick Barry. (For the record, Barry made nearly 90% of his free throws; Shaq only made 52% of his.)
“Granny shots are thematic-based stock picks, and we have three general thematic views about the next few years: Millennials, AI and automation,” Lee said. “We also have some tactical portfolios, and what granny shots is doing is taking stocks that appear in multiple lists. So we think it's improving your chances of picking outperforming stocks. That's why it's not cool – because we're not using one cool model, but it's a higher reward-risk opportunity.”
There are some “cool” names on Lee’s list, like Apple (AAPL) and Alphabet (GOOG), both members of the trillion-dollar market cap club. But then there are some companies that are not on everyone’s must-buy list.
Ameriprise (AMP), a financial services company, is a “good way to play what will likely happen with millennials, because millennials are going to become quite credit-intensive over the next 20 years,” Lee said. “They're going to start buying cars and houses and they're going to inherit $68 trillion.” He also likes JPMorgan Chase (JPM) in this space.
“Clearly, this huge wealth transfer is going to have a big influence on equities – $68 trillion transferring to one single 20-year generation is equal to the wealth of the entire country of China and Japan combined,” Lee said. “So it's a monstrous amount of money, and it's at a time when their consumption profile is growing. So I think the odds of equity returns being better in the next 10 years than the last 10 are quite high. So in other words, we had a great move from 2009 to 2019. I think stocks from 2020 to 2030, could do even better.”