Many investors are focused on navigating the highly volatile stock market right now. One fund manager has whittled down his firm’s holdings and is biding his time for the right opportunity.
Eddie Ghabour is a managing partner at Key Advisors Wealth Management, a firm that oversees $1 billion in assets. He recently told Business Insider that his team has sold off roughly 70% of the firm’s stock holdings and is sticking with just a small amount of gold and fixed income for the time being.
“We don’t think the market or investors are properly assessing the risks that we have of going into a stagflationary environment,” he said. “I think everyone’s holding on hope, like last year, where on the tariff tension, we had this quick V shape recovery, and everything was good. This is a much different scenario.”
Ghabour admitted that he takes comfort in the fact that his firm sold off stocks in sensitive areas of the market, such as software and technology. While these sectors took a beating prior to the Iran war breaking out, he thinks they are telling an even scarier story now that the US economy could be flirting with stagflation.
Federal Reserve chair Jerome Powell recently stated that he didn’t think the US had reached stagflation yet, a view shared by Nobel laureate economist Paul Krugman. But Ghabour thinks that by the time the numbers show real stagflation, the market will have already fallen significantly.
So what would it take for him to deploy the firm’s cash pile?
Ghabour said he’s watching for two key things that he says would signal conditions are improving.
“What we need to see is we need to see the 10-year bond stabilize and oil stabilize right now,” Ghabour said, noting that the move in the 10-year Treasury has been “violent,” and it could keep going higher.
He added that the oil market’s volatility is also making his team nervous. Until it stabilizes to the point at which gas and diesel prices decline, they won’t be comfortable adding any long positions.
That’s not to say the fund manager doesn’t see the opportunity to acquire stocks that are being repriced amid the volatility. Ghabour said that he’s waiting for the right opportunity to start buying again, he just thinks the dip is still in its early stages, as the S&P 500 still has further to fall.
“A lot of people say, ‘I want to buy the dip and take advantage of the opportunity,’ yet they don’t raise the cash to be able to buy the dip,” Ghabour noted. “If you’re fully invested, you’ve got nothing to buy the dip with.”
When his team does start buying again, Ghabour says they will be mostly focused on Big Tech stocks. He cited Nvidia, Apple, and Applied Materials as examples of stocks they think will benefit whenever market conditions shift.
“The opportunities we’re going to have sometime in the second quarter, we think we’ll pay really big dividends in the latter part of this year,” he said. “This global energy shock is going to create some of the best buying opportunities we’ve seen since the tariff crash last year.”
