Investment Director Who Recommended Tel Aviv Shifts Focus to US Market
Translated & summarized from Globes by baba
Investment director Shmuel Ben Aryeh has shifted his portfolio allocation from Israel to the U.S., citing high valuations in Israel and the strength of the American economy. He recommends specific U.S. tech and AI stocks, as well as Israeli gas and defense companies.
The story in 5 lines · by baba
- Investment director Shmuel Ben Aryeh is moving portfolios from Israel to the U.S.
- He cites high Israeli stock valuations and U.S. economic strength.
- Ben Aryeh sees no immediate positive catalysts for the Israeli market.
- He recommends U.S. tech, AI, and infrastructure stocks.
- Specific Israeli companies in gas and defense are also suggested.
Shmuel Ben Aryeh, Director and Deputy CEO of Investments at Pioneer Wealth Management, who previously recommended Israeli stocks like Teva and insurance companies, has significantly shifted his investment strategy. He now advises allocating the majority of investment portfolios to the United States, moving away from the Israeli market.
Ben Aryeh explained that while he started the year with 65% exposure to Israel and 35% to international markets, he is now taking profits after a substantial rise in the Israeli stock market. He noted that the Israeli market had been stagnant from 2013 to 2023, with a sharp increase of over 100% occurring only after September 2024 events and "Operation Iron Swords," leading to high valuations. Ben Aryeh stated, "To continue rising, you need a catalyst or a positive event. When I look at the local economy right now, searching for either, I don't really see one on the horizon." He is also skeptical about elections bringing market growth, citing potential post-election uncertainty.
In contrast, Ben Aryeh sees the U.S. economy as exceptionally strong, with consistent quarterly growth and a robust employment rate. He believes significant investments in infrastructure and artificial intelligence will continue, partly due to U.S. concerns about China. He recommends a focus on AI and technology stocks, as well as U.S. infrastructure and defense companies like Lockheed Martin.
For a conservative investor, Ben Aryeh suggests 15% in U.S. stocks, emphasizing large-cap companies and AI, and 5% in Israeli stocks excluding real estate. He also recommends 50% in corporate bonds with a 2-3 year maturity, 20% in Israeli government bonds with a 7-10 year maturity, and keeping 10% in cash for opportunities. For aggressive investors, he suggests 60% in U.S. stocks (tech and AI) and 30% in Israeli stocks focusing on dividend-paying companies, with 10% in cash.
Regarding bonds, Ben Aryeh prefers the Israeli market for Israeli investors, citing a better effective return in shekels compared to dollar-denominated bonds abroad when currency fluctuations are considered. He highlighted specific Israeli companies like Ratio for its exposure to the Leviathan gas field and Formula for its strong cash position and subsidiary valuations. In the U.S., he pointed to Broadcom and Micron for their roles in the AI and memory sectors, and Meta for its data processing capabilities. He also noted CEG for energy infrastructure supporting AI and Lockheed Martin for defense capabilities.