Investing.com — Oppenheimer Asset Management advises investors to maintain a focus on long-term opportunities amid market volatility, suggesting that the coming year will present compelling opportunities to capitalize on overlooked assets.
In its latest report, the investment management firm highlights the importance of maintaining resilience and diversification as markets undergo a complex transition from elevated interest rates to a more normalized economic environment.
Equity markets have shown remarkable resilience in 2024 despite occasional pullbacks fueled by concerns over inflation, rate hikes and geopolitical tensions. These pullbacks, often seen as “trimming” or “haircuts,” have allowed the broader bull market to remain intact.
Oppenheimer strategists led by John Stoltzfus argue that such periods of market decline create opportunities for investors. “We suggest investors look for ‘bathwater babies’ when markets experience dips,” the note emphasized.
The report identifies key drivers for 2025, including the pace of Fed rate cuts, technological advances and consumer resilience.
The Fed, which began unwinding restrictive monetary policies in September 2024, is expected to cut rates further, albeit cautiously. Stocks fell last week as the Fed’s updated projections pointed to just two rate cuts in 2025, down from the three cuts previously forecast and fewer than the four to five cuts expected by the futures market.
Still, Oppenheimer praised the central bank for its efforts to balance inflation control with employment stability, describing its actions as key to 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 prioritizes technology, communications services, consumer discretionary, and industrials.
“Today’s technology, including artificial intelligence, probably parallels the car in the early 20th century,” the strategists point out.
For investors seeking broader diversification, Oppenheimer points to opportunities in small- and mid-cap stocks, which are expected to benefit from rate cuts. Moreover, it recommends maintaining some exposure to cash to “offset equity portfolio risk.”
Oppenheimer also has a small position in , reflecting purchases by emerging market central banks to support their currencies and investors hedging against persistent inflation in the US and globally.
Overall, while geopolitical risks, changes in domestic politics and the global economic recovery remain potential headwinds, Oppenheimer’s forecasts suggest that the resilience of the US economy, fueled by strong consumer demand and innovation, will continue to support equity performance.
“Even when things are improving, there can be setbacks or unrealistic expectations that will stir the pot; but a tour usually does not end the journey,” the report concludes.
