Ameriprise Financial Adviser Nancy Daoud joins Yahoo Finance’s Akiko Fujita and Jen Rogers to discuss the latest market outlook as Wall Street heads for a strong November finish.
AKIKO FUJITA: Move on to politics here. President Trump now saying he will, in fact, leave the White House if the electoral college formalizes President-elect Joe Biden’s win. This– really, these comments coming from President Trump the closest we have seen the president to admitting defeat in the presidential election. Meanwhile, the president says he’s going to be visiting Georgia next weekend to help those two Republican senators as Republicans looks hanged on to the Senate.
Let’s bring in Nancy Daoud. She’s an advisor at Ameriprise Financial. And Nancy, you know, it’s interesting here because we didn’t see much of a reaction today, obviously, because, last week, we saw– or earlier, this week, we saw kind of a pop on the back of the GSA administrator, essentially giving the green light to this transition process over in Washington. How are you looking at politics right now in the context of the markets when there are so many other factors at play, particularly the vaccines sort of being front and center?
NANCY DAOUD: Well, first, I think the market is probably reacting to too much turkey yesterday. But, anyway, the politics really doesn’t come into play here. I think the most important thing is that it looks like the market has already priced in, you know, a Democratic House and a Republican Senate.
And that means, OK, business as usual. But we really don’t know. The reality is we don’t know. And the most important thing I can say with certainty is that there will always be uncertainty. So we can’t really look to politics to make investment decisions or to plan our financial goals. It has to stick to our own personal values and time frames and not stomach lining, which is very fancy terminology for risk profile.
JEN ROGERS: So we are all trying to find some kernels of certainty in what we think a Biden administration is going to look like. Even if you don’t want to talk about the politics of everything right now, we are looking ahead to what his cabinet is going to look like. Janet Yellen as a potential Treasury Secretary seems to have been greeted, really, from all corners pretty, pretty happily– low interest rates and inflation.
Look, she has a background in fiscal stimulus and fiscal measures. She’s going to be coming at this from a different area right now. But what do low interest rates mean for people? I mean, you must have clients that are retirees. If you had Janet Yellen in the Treasury Secretary seat, what do you need to do as somebody that’s retired?
NANCY DAOUD: Yeah, I mean, look, inflation and low interest rates has always been a consideration for as long as I can remember and especially now, of course, because interest rates are about as low as can be. And, you know, if retirees decide that they want the safety of cash, I call that losing money safely because all you have to do is go to the grocery store and realize that things are going up dramatically. And, if you’re sitting in cash, you are, in effect, losing money.
So if– you know, I think, depending on your stage in life and where you are, if you’re an accumulator and you’re systematically saving, then volatility is your best friend. And interest rate environment doesn’t really matter. But, if you are a retiree or getting close to retiring, you really have to break up your assets into the now bucket, the later bucket, and the much later bucket.
And the much later bucket absolutely has to have US equities because that’s the only thing that has proven, so far, in the last 100 years, that has stayed ahead of or at least abreast of inflation and the purchasing power of the dollar. Especially this has become even more important with longevity here to stay and people living– or life expectancy going to 100 years of age. That’s going to make a huge difference.
AKIKO FUJITA: Nancy, let’s talk about some of the sectors that you are watching closely, health care among them. And you’ve talked about how you’re watching some of these names in terms of those who are really at the forefront of vaccine development for the coronavirus. We’ve got this news out today from AstraZeneca, the CEO essentially saying that the company is going to run another phase 3 retrial for the vaccine because the initial trial, the doses were too low.
How are you looking at all of these names that are in this race? And, ultimately, how do you invest in it? Is it in, you know, the sort of these key names like a Moderna or a Pfizer and AstraZeneca? Or do you also look at the supply chain and who’s actually going to benefit in the distribution?
NANCY DAOUD: Well, I mean, you bring up a very good point. My understanding is that all the pharmaceutical companies are working together to achieve the vaccine. So there isn’t like this crazy competition. But, again, I’m not an insider, so I don’t know.
But, look, whether it’s a vaccine or a pharmaceutical company, the principles of investing are still the same. When you’re buying a stock in a company, you’re buying its financial status or its balance sheet. No matter how good their product is, no matter how good their vaccine is, if they can’t run a business, it’s a losing– it’s a losing proposition.
So let’s, you know, make sure that we’re grounded and we understand what we’re doing. There’s the support piece, which is the storage of this vaccine that requires minus 94 degrees– that’s going to be something to certainly look at– and also the transportation and how we’re going to get this vaccine out to the global community, not just the United States. Those are all things I’m watching for.
JEN ROGERS: I was watching shares today. Right now, we’ve got some big movers to the upside in the travel space, excitement over the vaccine, which you were just talking about. But also we’re seeing some of the Home Depot and Lowe’s names moving higher. And I know this is an area you’ve been thinking about and a lot of people have.
Look, people have been at home. Look, retail– we’re talking about Black Friday today. It’s not just about going out and buying a coat. I think some people also look at, all right, I’m going to go buy a refrigerator or a stove. How powerful a trade do you think this still is?
NANCY DAOUD: Well, I think that, although the pandemic has caused everybody to be at home and caused home improvements and modifications and everything to really flourish during this time, I believe that it will likely continue for a little bit longer or maybe forever because the world has changed. And we have to adjust to the new world that we’re living in now.
Maybe remote work is going– is here to stay. And we have yet to see because we’re not past the pandemic yet. And we haven’t really seen the effects of working from home. So far, it’s been sort of an accommodation, but we don’t know what the real, you know, the good, the bad, and the ugly of it is yet. And we have yet to find that out.
AKIKO FUJITA: Yeah, the last few weeks certainly a good lesson in that as we’ve seen the shift in how these infection rates have gone up. Nancy Daoud, advisor at Ameriprise Financial. It’s good to talk to you today.
NANCY DAOUD: Thank you.