A Challenging Year Ahead For The S&P | Dave Iben

But that spells opportunity for active investors

On this channel, we often highlight abnormalities we notice in the financial markets.

Today's guest actively embraces them as gifts from the investment gods.

In his words: "Fortunately, the financial markets are often quite inefficient, presenting opportunities for us to generate substantial value for our clients’ portfolios."

So… where are the biggest inefficiencies in markets today?

And what opportunities are they presenting?

To find out, we have the great fortune to speak today with highly respected money manager Dave Iben, Chief Investment Officer, Managing Member, Founder, and Chairman of the Board of Kopernik Global Investors, as well as Portfolio Manager of its main funds. Kopernik manages $billions in client capital.

Dave predicts 2025 will be a rough year for the major indices like the S&P 500 and Nasdaq. But he think that same turbulence will create attractive opportunities for experienced active investors.

To learn why and how he plans to position client capital, click here or on the the video below:

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Adam’s Notes: Dave Iben (recorded 1.8.25)

EXECUTIVE SUMMARY:

• Dave emphasizes that inefficiencies in financial markets provide substantial opportunities for active managers to generate value. He describes these inefficiencies as "gifts from the investment gods," particularly when valuations are distorted. Kopernik actively seeks undervalued assets where the market fails to recognize their true potential, creating an edge for their portfolios.

• David notes that the U.S. market is one of the most overvalued in history based on metrics such as market cap to GDP ratio, replacement value, book value, and earnings. He points out that the current U.S. market cap constitutes 75% of the World MSCI Index despite representing only 20-25% of the global economy. This imbalance highlights significant valuation risks, with David suggesting that such elevated levels are unsustainable. Historical precedents, such as the 1972 and 1999 corrections, serve as cautionary examples of overvaluation.

• Kopernik employs a bottom-up investment approach, focusing on deeply undervalued assets. Approximately 70% of the stocks they hold are not part of major indices, an increasingly rare trait among funds. This approach allows the firm to capitalize on overlooked opportunities, particularly during times of market euphoria when the focus shifts to momentum stocks. David stresses that active management thrives when broader indexing fails, as evidenced by previous market cycles where active value strategies outperformed significantly during corrections.

• Dave identifies abundant current opportunities in