If you got into crypto in the past year, it may have been a fun run. You’ll want to get out of it soon though, according to Adam Parker. That’s one of 10 investing predictions for the next 10 years by the Trivariate Research market strategist. Bitcoin , the flagship cryptocurrency, is up 25% in 2024 and 125% over the past year, according to Coin Metrics. However, Parker said the asset class that was touted as a good store of value “has no legislated or intrinsic value” and that holders should sell it. “We have always said ‘we prefer a basket of high-quality US growth equities'” when asked about crypto, Parker said in a note over the weekend. “Missing the appreciation of the asset class is not good, but participating in US growth equities has been more than adequate.” “Because it is just a proxy for risk taking, investors can mirror the exposure of a basket of crypto through low quality hyper growth stocks,” he added. “That basket is highly correlated to crypto – it just underperforms the US equity market.” Here are five other investing predictions Parker has for the next decade: 1. Own U.S. equities over U.S. corporate bonds Many investors expect slightly lower returns in equities over the next decade due to high valuations and peak margins. The long-term returns on stocks aren’t as low as some are thinking, however, according to Parker. “[Investors] often tell us that bonds look relatively attractive, or that there is not enough equity-risk premium for stocks right now,” he said. ” Their logic is that they can buy bonds that mature in five years with 5% yields that they deem as ‘money good’ rendering the volatility-adjusted return potential of equities as relatively unattractive.” “When we ask them what their assumption is for US equities, they invariably confidently tell us it is 7%-8%. Why so low? The long-term returns of equities are closer to 12%,” he added. 2. Avoid commercial real estate (CRE) The magnitude of excess supply in CRE is “astounding” and “enormous” and that investors would do well to stay away from it, according to Parker. “Owning U.S. banks with high CRE exposure in undesirable areas (New York, San Francisco, Chicago, etc.) will also be a net negative, and we would not be surprised if this excess lasted for the rest of the next decade,” he said. “The [savings and loan] crisis lasted 1986-1995 – that time span does not seem like an unreasonable starting point as a judgment call about how long commercial real estate excess supply will take to clear.” Parker cited “countless” anecdotal reports of office buildings that need to be refurbished or converted to residential “where the economics make the current physical footprint worth less than zero.” 3. Own copper and copper-related equities Mining companies will play a key role in decarbonization over the next decade, and the risk-reward in that period seems skewed to the positive for investing in copper, according to Parker. Although many global miners aren’t “pure play” copper companies, they have enough copper exposure as well as liquid ADRs (or American depositary receipts), he said in the note. A basket of Freeport-McMoRan and Southern Copper , with ADRs of Australia-based BHP Group , Rio Tinto and Vale “would be a fantastic way to gain copper exposure and beat the S & P 500 over the next decade,” Parker said. He also noted that the stocks offer diversification from the AI-related semiconductors and growth stocks that “likely will bolster the overall US equity market” and pointed out that Freeport-McMoRan’s correlation with Microsoft over the last decade has been relatively low on average. Shares of Freeport-McMoRan, BHP, Rio Tinto and Vale are down more than 10% each this year. Southern Copper has lost 7% in that time. 4. Own oil and oil-related equities Parker’s confidence level on energy stocks over the next 10 years is “exceedingly high” due to: a less rapid rate of demand destruction for oil; capital spending dollars from energy companies that’s still below levels from a few years ago; low earnings expectations; cheap valuations; and negative sentiment. “We have a bullish oil view for a long-time, anchored by the belief that capital spending-to-sales from the largest 100 global energy companies is much lower than in the past, and that demand is likely to peak several years from now – and require about 107 million barrels per day of production at that time,” he said. “This sector checks all the boxes … We think there will be continued consolidation, so owning oil-sensitive energy stocks that are mid-cap likely will prove prudent,” he said. The Energy Select Sector SPDR Fund (XLE) , which tracks the S & P 500 energy sector, is up about 3% year to date. Marathon Petroleum is the fund’s best-performing stock, up 16%. 5. Long 10-year U.S. Treasurys The yield on the 10-year U.S. Treasury note is likely to be higher than that of major European countries, Parker said, and investors could benefit from holding those bonds to duration – and shorting European bonds. “During the European Financial Crisis 30% yields in Greece looked unattractive. Now, the 10-year Greek bond offers 3.39%, vs. the U.S. Treasury at 4.25%,” Parker said. “How could the excess risk of the Greek economy, political landscape, economic growth, and demographics, not be rewarded with extra reward relative to the US bond?” “Only through unnatural forces that will unwind over time,” he added. “The same is true for France (2.82%), Italy (3.79%), Spain (3.25%), and Portugal (3.08%). You can have those bonds and hold them until duration. We will take the U.S.”
