The recent enthusiasm surrounding Tom Lee’s new themes for the Fundstrat Granny Shots ETF reflects a prevailing optimism that, frankly, warrants skepticism. While Lee’s focus on sovereignty security and generational shifts shows strategic thinking, it also reveals a potentially naive confidence in market trends that are far from guaranteed. The notion that companies will soon fix their supply chains within national borders assumes a level of technological and political stability that is seldom achievable in a tumultuous world. Geopolitical upheaval, technological disruptions, and global economic uncertainties are likely to undermine these ambitions long before they come to fruition. Market optimism rooted in such predictions often overlooks the complex realities that temper these ambitions, risking misplaced investment confidence.
Furthermore, the move to emphasize Generation Z and Alpha as primary drivers of future market growth might appear insightful but is ultimately speculative. Generational shifts are rarely linear or predictable, and basing investment strategies on these cohorts’ anticipated behaviors can amount to wishful thinking. The assumption that younger generations will naturally fuel market growth neglects the economic challenges they face—rising student debt, housing affordability crises, and unpredictable job markets could impair their capacity to deploy disposable income into stocks, or even interest in traditional investments at all. This approach risks falling prey to the “future hype” trap—a seductive but dangerous premise that younger generations will inevitably become market engines simply because they are younger.
The Strategy Mimics a Flawed Analogy
Lee’s analogy comparing his ETF’s investment approach to Rick Barry’s unorthodox underhand basketball shot is revealing, yet flawed. While the analogy underscores a commitment to unconventional strategies that have proven effective, such as focusing on stocks that fit multiple themes, it implicitly suggests that contrarian or “correct” strategies can deliver consistent results. But markets are not like basketball shots—they are driven by unpredictable external forces, conflicts of interest, and systemic risks that no single “correct” approach can fully neutralize. Declaring that the ETF invests in quality stocks with strong earnings and high return on invested capital (ROIC) may sound reassuring, but it also risks oversimplifying the complex dynamics of the current economic environment.
The reliance on quarterly rebalancing and a handful of themes centered on future market drivers might deliver short-term gains, but it also raises questions about long-term sustainability. An active management approach aimed at capitalizing on emerging themes might generate higher returns in the immediate term, but it also exposes investors to style drift and the peril of following trends that may fizzle as quickly as they emerged. The so-called "Granny Shots" strategy, while catchy and memorable, runs the risk of being a band-aid solution—a fashionable concept that doesn’t necessarily withstand rigorous economic scrutiny.
The Reality Behind the Fund’s Performance Hype
The glowing reports of the ETF’s rapid growth and outperforming the S&P 500 might be compelling, but they also demand a healthy dose of skepticism. A 13% return in a rising market is encouraging, but it doesn’t guarantee future success amid the unpredictable currents of the global economy. The assets under management reaching $1.3 billion can create a self-fulfilling prophecy, but it may also breed complacency or overconfidence among investors who chase recent gains without fully understanding the underlying risks.
There is a broader concern about the narrative that active, thematically driven ETFs are inherently better or smarter investments. Fundstrat’s strategy, encapsulated in a handful of themes, risks being overly concentrated in speculative areas or overreliant on assumptions that may not materialize. The current trend toward active management is often driven by the very frustration investors feel with passive strategies that seem disconnected from real-time market shifts. While active funds can outperform in certain scenarios, they are also susceptible to managerial biases and short-termism—a factor that can lead to investor disappointment in the long run.
By placing heavy faith in trend-based themes like sovereignty security and generational shifts, investors risk leaning into a narrative that might not hold up under economic pressure. This kind of strategic hubris—believing that current themes will inevitably define the future—ignores the historical volatility and the unforeseen shocks that have repeatedly derailed even the most promising forecasts. At its core, the optimism embedded in Lee’s strategy feels somewhat detached from the complex, often unpredictable realities that shape global markets, making it a strategy that could falter when the next unexpected crisis hits.
