Investing.com — Oppenheimer Asset Management advises investors to remain focused on long-term opportunities amid market volatility. This suggests that the coming year will provide attractive opportunities to capitalize on overlooked assets.
In its latest report, the investment manager outlines the importance of remaining resilient and diversified as markets undergo a complex transition from high interest rates to a more normalized economic environment.
Equity markets have shown remarkable resilience in 2024, despite periodic pullbacks due to inflation concerns, interest rate hikes and geopolitical tensions. These pullbacks, often seen as trims or haircuts, have allowed the broader bull market to remain intact.
Oppenheimer strategists led by John Stoltzfus argue that such periods of market downturns create opportunities for investors. “We advise investors to look for ‘babies thrown out with the bathwater’ when market downturns occur,” the note emphasizes.
The report identifies key drivers for 2025, including the Fed’s measured pace of rate cuts, technological advancements and consumer resilience.
The Fed, which started phasing out restrictive monetary policy in September 2024, is expected to cut rates further, albeit cautiously. The stock market fell last week as the Fed’s updated projections showed only two rate cuts in 2025, compared with three previously forecast rate cuts and fewer than the four to five rate cuts expected by the futures market.
Nevertheless, Oppenheimer commended the central bank for its efforts to balance inflation control with employment stability, describing its actions as crucial for achieving a “relatively soft landing after some significant periods of turbulence in the economy and markets.”
In terms of sector preferences for 2025, the company favors technology, communications services, consumer discretionary and industrial sectors.
“Today’s technology, including AI, is likely to parallel the car of the early 20th century,” the strategists emphasize.
For investors looking for broader diversification, Oppenheimer points to opportunities in small- and mid-cap stocks, which are expected to benefit from an easing of interest rates. Additionally, it is recommended to maintain some exposure to cash to offset the risk of the stock portfolio.
Oppenheimer also has a small position in , reflecting purchases by emerging market central banks to support their currencies and by investors hedging against persistent inflation in the US and globally.
While geopolitical risks, domestic policy shifts and the global economic recovery remain potential headwinds, Oppenheimer’s outlook suggests that the resilience of the US economy, driven by strong consumer demand and innovation, will continue to support stock performance.
“Even when things improve, there may be setbacks or unrealistic expectations that stir the pot; but a detour usually does not mean the end of the journey,” the report concludes.
