Zvi Stepak is feeling pessimistic, and this is the man who wrote at the end of 2002 that the investment opportunities created by the capital market crisis were highly attractive. In February 2003, as the Tel Aviv Stock Exchange floundered, he wrote, "In these days of rising oil prices, one doesn't have to go as far as South African gold mines of black gold fields in the Persian Gulf, when the real gold mine is right next door." This is the man who's now rating the TASE a Sell.
Stepak has come a long way since those above two recommendations, which proved accurate and made him one of the most influential names in the local business scene. Certainly, he has changed his tune at the New Map of the Capital Market 2006 conference on Monday, held by the Shekel Group, Meitav, and Maariv Congresses.
In his usual quiet way, the leader of the Meitav investment firm believes it's time to sell. "It is time to reduce risks, even at the price of forgoing some returns," Stepak said on Monday. "It would be better to reduce shareholdings to lower levels than we had become accustomed to.
"The market is fully priced. Investors should reduce the duration of bondholdings in their portfolios. The market is not pricing the risks and increase in uncertainty properly."
What means of defense are there? Foreign stocks and a little gold, Stepak says.
The seasoned broker named three "global riddles" ? real estate, oil, and U.S. treasuries, and three "local riddles" ? what the forex market will do, where yields on bonds will go, and what will happen on the stock market.
There are factors supporting the stock market, such as continued improvement of corporate results and low interest rates on deposits, though those rates are on the rise. Alternatives to stocks are unattractive at this time. But the risks that the market is not fully pricing include political instability, escalation on the security front, the instability of the international stock markets, and the crisis with U.S. treasuries.
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