Navigating Risk and Opportunity: Market Insights from Opal Capital
- Opal Capital
- Sep 22
- 5 min read
On August 20, 2025, our Founder and Chief Investment Officer, Austin Graff, joined Weaver Consulting Group for their Market Update podcast to share insights on today’s market environment. Drawing on his experience at PIMCO and Goldman Sachs, as well as his role managing the Opal Dividend Income Fund (DIVZ), Austin weighed in on equity market concentration, global opportunities, and the shifting dynamics in fixed income.
“There’s growing concentration at the top of the market… NVIDIA and Microsoft represent over 15% of the S&P 500,¹” said Graff. This trend is accelerated by passive flows and narrow enthusiasm around artificial intelligence, fueling elevated valuations and risk.
Market Concentration: A Growing Risk
The “Magnificent Seven” (Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Broadcom/Tesla) mega-cap stocks now account for roughly 35% of total market capitalization.¹ While these are strong businesses, many share the same AI-driven business models, raising concerns about risk exposure and sustainability. Their capital expenditures have surged, yet earnings growth is slowing, which echoes past speculative cycles like the dot com bubble.²
Diversification Is More Important Than Ever
Austin emphasized the need to look beyond the market leaders:
In the U.S., “consistent earners” such as Procter & Gamble, Coca-Cola, select utilities, and pharmaceutical companies provide stability and are trading at attractive valuations.
International equities are also showing promise. Governments abroad are adopting U.S.-style fiscal and monetary stimulus—Germany’s trillion-dollar infrastructure commitments and the European Central Bank’s recent rate cuts are key examples. With international markets already up 20%+ year to date³, Austin sees continued upside.
Fixed Income: A New Reality
The longstanding bond bull run officially ended in 2022. Bonds no longer provide the same hedge against equity risk, as highlighted when long-term rates rose in late 2024 despite a Fed rate cut.
Austin pointed to short-duration bonds (three to five years) as a better opportunity today, while also noting the value of VIX-based hedging strategies (Cboe Volatility Index - a financial benchmark designed to be an up-to-the-minute estimate of expected volatility of the S&P 500 Index, and is calculated by using the midpoint of the real-time S&P 500Index option bid/ask quotes). With volatility trading near historic lows, these tools can provide cost-effective protection during market shocks.
What This Means for Investors
The market environment is changing, and so should investor strategies. Concentration risk is rising, but there are plenty of opportunities to diversify across U.S. defensive sectors, international markets, and shorter-term bonds. By rethinking traditional hedges and broadening exposure, portfolios can be better positioned for resilience in the years ahead.
Final Thought
Opal Capital’s perspective serves as a reminder that owning the familiar is not always the safest approach. With market leadership narrowing, investors should actively seek balance across sectors and geographies while reassessing how fixed income fits into their strategies.
For a deeper dive into these insights or to catch more market updates, you can listen to the replay on Weaver Consulting Group’s Monthly Conference Call Archives.
¹Source: Bloomberg: As of 08/20/2025
²Source: Bloomberg: As of 08/20/2025; Source: Opal Capital Research As of 08/20/2025
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