Investment Manager Advises Caution Amid AI Growth and Market Volatility
Meni Kalfon, a 43-year-old investment manager at Altshuler Shaham Pension and Provident Funds, advises investors to avoid chasing stock trends driven by social media hype, such as TikTok or Instagram recommendations. He emphasizes maintaining a balanced exposure to stocks, neither too high nor too low, due to the unpredictable nature of the market and the evolving artificial intelligence sector.
Kalfon recounts his personal journey from an electronics technician in the Israeli Air Force to a financial professional, highlighting his early investment experience before the 2008 crash. He joined Altshuler Shaham in 2020, focusing on portfolio management and pension funds. Regarding the sharp 9.5% drop in the Tel Aviv 125 index in June, he notes the market had largely priced in positive scenarios, but geopolitical tensions, including recent conflicts and the US-Iran agreement, have introduced uncertainty.
Looking ahead, Kalfon identifies four key factors influencing the market: Israel's upcoming elections, expected continued interest rate cuts in Israel, the US midterm elections, and the impact of AI technologies. He points out that AI-related companies now represent about 25% of the Tel Aviv 125 index, including chipmakers like Tower Semiconductor and Nova, as well as energy and data center firms.
On currency, despite recent shekel weakness against the dollar, Kalfon expects long-term shekel strength due to ongoing capital inflows. He also discusses US Federal Reserve policies, suggesting that while rate hikes are priced in, any increases will likely be moderate. He recommends extending bond durations up to nine years in both Israeli and US government debt.
For portfolio construction, Kalfon suggests a conservative investor allocate 7% to Israeli stocks, 15% to US stocks, and smaller portions to Europe, Japan, and Taiwan, totaling 30% equities. The rest should be in bonds, with a focus on Israeli government bonds and some corporate bonds. Aggressive investors might increase equity exposure to 80%, reducing bonds accordingly.
Kalfon highlights leading companies such as TSMC and Nvidia in AI, and Apple for its valuation. He also sees renewed value in US financial and healthcare sectors. In Israel, he recommends bank stocks, which have declined 5% this year but remain profitable in low-interest environments. He praises Israeli retailer Shufersal, which has risen 167% in three years due to strategic moves like direct meat imports, and Keystone, an infrastructure investment fund up 300%, with exposure to electrification and data centers.
Kalfon concludes that the market seeks stability amid dynamic conditions, and investors should focus on strong, proven companies rather than speculative trends.