The portfolio manager who identifies an opportunity in the stocks of the food chains

This situation naturally gives rise to the question that will surely continue to accompany the market in the near future: is there room left for increases in the stock markets or has a bubble developed in them under the auspices of the growing interest in artificial intelligence?

Lirin Meshulam, investment manager at Sigma-Clarity Investment House, has a clear answer: “The market is expensive, but it’s really not a bubble. There are places where the prices are a little out of control, but in general the prices are realistic.”

In his estimation, “We are at the beginning of a wave of investments in technology, which started with the introduction of AI at the end of 2022. This is really the beginning of the process still, when the horizon of possibilities is so wide and touches so many fields. I believe that we have not yet scratched the potential, and I think that the very fact that it is computing capabilities, will oblige all major companies to continue investing in the field. Because no company can afford to be left behind.”

Great potential in Israel

Mesholam (35) was exposed to the world of investments in his youth, when according to him he already knew that this was what he wanted to do. “I became interested in the capital market during high school, and after the army I took two years of courses in capital market trading, graph analysis, with a specialization in options and shares. Then I realized that this is what I want to focus on,” he says. Following this, he decided to do a bachelor’s degree in economics with a specialization in the capital market, from where he came to the investment house Sigma-Clarity, where he has been working for 7 years, first as a trader and then as an investment portfolio manager.

Despite his optimism about the stock exchanges in the US, he recognizes a higher upside in the local market. “Our market was one of the strongest in the world last year. If we look at the data of the business activity, it seems that the companies here are working very, very hard, they are developing and enjoying high demand. I think there is a very big potential here, certainly if you take into account the return of foreign investors to Israel.

“I don’t know if it will continue with the same intensity, because we really are after two phenomenal years,” he qualifies, “but certainly the economy here is strong and the trend will continue. Of course when people see the amazing returns of the market – everyone wants to take part in it.”

He chooses to focus his recommendation in the local market on two branches: food retail and technology companies. Areas that to some extent are on the fringes of the local market, which is traditionally biased towards finance and real estate stocks.

“It is true that the technological sector is not so dominant in trade in Israel, but we see the demand in the world for Israeli technology, whether it is Nvidia or other companies that are looking to develop here,” says Meshulam. “Eventually, some of this reaches the market, and for example we see a lot of activity at IT companies, a field that is growing at a very, very fast pace. What’s more, everything is becoming more technology-based and AI-biased.”

As for the food chains, Meshulam identifies “quite significant potential into 2026”. According to him, “We see their impressive activity, which is reflected in the handsome profits of the large food retailers. The companies here enjoy a very high level of concentration, when despite the attempts of the citizens and the government to fight the cost of living, the prices in the supermarket do not decrease. That is why, in my opinion, they are an excellent basis for investment.”

Emphasis on the local market

For the solid investor, Mesholam recommends focusing on the local market, with an allocation of 70% of the portfolio to local bonds. The recommended division for his taste is 50% of this in government bonds (half shekel and half linked), and another 20% in shekel and linked corporations (equally divided). He recommends distributing the rest of the portfolio half in Israeli stocks and half in foreign stocks.

For an aggressive investor, his recommendation is to build a stock portfolio with half of it in the Israeli market, with an emphasis on the technology and consumer sectors, to which he adds the local media stocks. The balance of the portfolio is directed to American stocks in the fields of technology, infrastructure and communication (30%), and European stocks in the fields of finance and security, alongside Chinese technology stocks.

Opportunities in Europe and China

Meshulam recognizes potential in the European market, while investment managers are divided about the future of growth on the continent. “Europe had an excellent year,” he states. “We have seen that economies like Spain, Italy and Greece, which were considered weak for many years, suddenly showed a high level of financial discipline and are encouraging employment in the countries. These are processes that will continue in the coming year as well.

“From a sectoral point of view, the banks in Europe are at an excellent point to break forward. These are entities that usually do not show crazy growth, but now they are at a pricing that is very much worth the exposure. The Central Bank of the Union has made a series of interest rate cuts, and it seems that the banks in the region are stabilizing around this issue. So, in my opinion, they are at a good pricing point.”

As mentioned, even the shares of the defense sector, which have benefited from high tides in recent years, are favored by Mosholam. “It is impossible to ignore the geopolitical processes that are taking place, such as what happened last weekend in Venezuela. The European countries no longer rely on the US and want their security. They have multi-year plans to invest considerable sums in the defense industries. All these things are very supportive of the companies in the field in Europe, which are already benefiting from this matter and will continue, as it seems.”

Apart from Europe and the USA, another recommendation of Mosholam for investors is to allocate part of the portfolio to the Chinese stock market. “In recent years, a very significant leap has been made in Chinese technology. The administration wants to be dominant in the field, and is not ready for the West to hold a monopoly on the field of AI, and invests very large sums of money in it,” he explains. “For those who do not want to grant exclusivity to American technology led by Nvidia, there is the alternative of the companies in China.”