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Many investors are currently grappling with the volatile stock market. Amongst them is Eddie Ghabour, a managing partner at Key Advisors Wealth Management. His firm oversees $1 billion in assets, and they’ve strategically sold off a significant portion of their stock holdings.
Playing the Waiting Game
Ghabour revealed to Business Insider that they’ve pared down nearly 70% of their stock portfolio. The remaining investments are primarily in gold and fixed income. He mentions, “We don’t believe the market is correctly evaluating the risks of a potential stagflationary climate.” The firm is biding its time, confident that this isn’t the same scenario as last year’s quick recovery from tariff tensions.
Concerns Over Economic Indicators
Interestingly, Ghabour takes solace in offloading stocks in vulnerable sectors like technology. These areas, he notes, suffered before the Iran conflict and now hint at a scarier narrative. The US economy might flirt with stagflation, a concern he raises. Although Jerome Powell, the Federal Reserve chair, doesn’t think stagflation has hit, Ghabour is cautious. By the time it’s confirmed, markets might have plummeted.
Conditions for a Re-entry
So, what conditions would entice him to reinvest? Ghabour is keeping an eye on two critical factors for signs of improvement. One is the stabilisation of the 10-year Treasury bond, which he describes as having a “violent” movement. The other involves the stabilisation of the troubled oil market, which worries his team. Once these stabilise and fuel prices drop, they might consider long positions again.
Opportunities Amid Uncertainty
Despite the apparent risks, Ghabour sees opportunities to pounce on repriced stocks. However, he cautions that the dip hasn’t reached its nadir. He observes that many investors lack cash reserves to buy in during downturns. “Being fully invested means you can’t really buy the dip,” he warns.
When the time comes to invest again, the focus will likely be on Big Tech stocks. Ghabour cites Nvidia, Apple, and Applied Materials as future beneficiaries when the market rebounds. “The global energy shock will create prime buying opportunities akin to last year’s tariff crash,” he concludes optimistically, predicting benefits by year-end.
