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A democratic sweep creates a buying opportunity for the long-term investor: Sr. Portfolio Mngr .

In this article:
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Neel Shah, PEAK6 Capital Management Senior Portfolio Manager joins the Yahoo Finance Live panel to talk about Alibaba’s Singles Day, the tech outlook and how the race for a vaccine is weighing on the markets.

Video Transcript

AKIKO FUJITA: Welcome to Yahoo Finance Live. I'm Akiko Fujita along with Zack Guzman. It is noon here in New York City, 2 and 1/2 hours into the trading day. And we are still seeing a stock screen across the board here in terms of major indices, the NASDAQ seeing the biggest gains. Certainly as expected, perhaps, because of the sell off that we saw over the last few days and the rotation out of tech. The NASDAQ up 208 points right now, the Dow up 63, and the S&P 500 up 29.

Alibaba shattering its Singles Day sales record, but shares are trading lower as China's new regulation rules create concern for the company's outlook. Our very own Editor in Chief Andy Serwer speaking to Alibaba Group presidents Michael Evans straight ahead. And also, virtual home buying-- how millions of Americans are purchasing new homes without ever walking through the door. That's all ahead here on Yahoo Finance Live.

But first, let's get to the markets. We've got Neel Shah who is a senior portfolio manager at PEAK6 Capital Management. Neel, it's great to talk to you. Tech certainly the big headline we're watching tonight, especially the news coming out of China and those draft rules that came out on potentially anti-competitive behavior from the big tech names. And then of course, we've been watching the tech sell off over the last few days. How are you looking at that space right now, especially in light of the regulatory environment, not just in the US, but around the world?

NEEL SHAH: Yeah, so, you know, over the last couple of days, you've seen a rotation take place in the market. You've had tech stocks take a beating. You've had your traditional value stocks get a big uptick. And, you know, that was kind of-- the vaccine news basically drove that, right? The question is what's going to happen going forward. Today, you're starting to see the tech stocks come back a little bit. The question, again, is that going to be sustainable?

The biggest headwind for tech stocks-- yes, it is regulatory going forward. It's not like tech stocks are like egregiously priced at the moment. But again, you do have those regulatory headwinds. I think the biggest catalysts going forward that I would be looking forward to is the Georgia runoff, right? If you get a Democratic sweep, can tech stocks be in a lot of trouble? Absolutely. But that could also create a great buying opportunity if you're a longer term investor.

ZACK GUZMAN: Yeah, and when you look at-- when you say tech stocks aren't incredibly overpriced here, it does raise questions about opportunities in the value sector, as well. And I know you've been focusing on some of the beaten down names through this, Boeing being one of them. Talk to me about how you know even the pop that we saw with the vaccine doesn't necessarily mean the opportunity for investors to get into some of those names is past us now, as you said, if you're a longer term investor focusing on that.

NEEL SHAH: Yeah, as far as value stocks go, this is really the first uptick. And our first uptick as in this is the first time they had a good move up. Are you looking to sell into that, right? I think if you're selling and taking profits, you're giving up on some great returns that could lie ahead. If, again, the vaccine gets embraced by everyone, we get our own vaccinated, and people come back, the economy gets back to normal, then I think value stocks are significantly underpriced.

AKIKO FUJITA: Neel, you mentioned the Georgia Senate race. It seems like the market is pretty much priced in a divided government and many investors see that as a positive to sort of keep the most progressive policies that the President-elect Joe Biden has put forward in check by Republicans. What happens if Democrats actually win those seats? Could we see a pullback?

NEEL SHAH: Yeah, I think, you know, that's the headwind that I've talked about. And I think you could see a potential pullback. But in the end, can anything significant come out of that? I don't think so. I think if you look at the Facebooks and the Googles of the world, which they're really going after, those stocks, even if they do get split up-- like, the sum of parts at the end of the day is probably worth more than a standalone company as it is right now. You know, if you were to split up WhatsApp out of Facebook or Instagram out of Facebook, at the end of day, some apart, those stocks could be worth more.

ZACK GUZMAN: Yeah, we always hear that kind of relative breakdown and you know the names there and what those risks might mean. On the flip side, though, you've got some other names that you could talk about there-- and we're going to be discussing Apple in just a second here. But if there is one that you would lean on in terms of those regulatory risks not posing as huge of an issue, which one would you look at?

NEEL SHAH: Yeah, I think that Facebook is kind of a one that could survive this. Facebook also has gaming platform. It has the Libra currency, the cryptocurrency, which if they get-- that goes through, which could be big. There's a lot of catalysts ahead for Facebook. And Facebook is not just your work from home stock. It's a stock in both worlds.

AKIKO FUJITA: Neel, how are you looking at this most latest wave of the coronavirus and how that is likely to impact the economic recovery? We had Dr. Michael Osterholm earlier on today. He's part of the Biden task force. And Zack and I were saying and he certainly didn't try to calm fears here, saying that we are in the midst of what could be a three month COVID hell. He also didn't rule out lockdowns altogether, as well. Do you think that the market is being a little too complacent about the potential for more stringent restrictions being reimposed?

NEEL SHAH: You know, at times, I ask myself that same question. I think the market does get complacent at times. You know, people think it's going to be-- you know, it could potentially be just a Santa Claus rally at the end of the day. You could get potential fiscal stimulus along with monetary stimulus from the [INAUDIBLE]. And, you know, if those things-- if all the stars don't line up at the end of the day, then yes stocks could get a big hiccup before things get better, because COVID is only going to get worse as we again, approach the holidays, and people have get togethers, and so forth.

AKIKO FUJITA: Neel Shah joining us from PEAK6 Capital Management. It's good to talk to you today.

NEEL SHAH: Thank you for having me.