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Annandale Capital CEO on how the Presidential election will impact the market

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George Seay, Annandale Capital CEO, joined The Final Round to discuss his outlook for the market as we approach the Presidential election and the areas of the market that may be most impacted.

Video Transcript

MYLES UDLAND: All right, welcome back to "The Final Round" here on Yahoo Finance. Myles Udland with you in New York. Let's turn our attention now to the markets, and also their kind of interconnection here with politics at a very interesting time for the US election cycle. For more on all that, we're joined by George Seay. He is with Annandale Capital. George, thanks so much for joining the show.

So let's go right to the election and this period. I know that you follow both markets and politics quite closely. And we talk so often about, you know, these big election events that come up, and well, here we are, about 35 days away from one of the more consequential elections that we've seen in some time. So as you think about both the election and both the way investors have or have not quite reacted to it, where are you kind of at in that sort of interplay right now?

GEORGE SEAY: Hi, Myles. Well, as we're getting close to the election-- and we're kind of in prime time now, just over a month out-- you're seeing it's almost like a lie detector test. You know, when somebody's telling the truth, it barely moves and there's no squiggles, and then when somebody lies, it starts gyrating like crazy up and down. We're not quite to that point yet, but you're seeing a lot more volatility up and down both in the markets right now.

And it's the level of anxiety and uncertainty out there. And I expect that to continue all the way through the election, and perhaps even afterwards, depending on how the markets judge the result. So investors should be in their core positions, and they ought to be kind of waiting for real big opportunities on the buy side or the sell side, depending on which way they gyrate.

MYLES UDLAND: Well, and thinking about that result, you know, last week, it seems to me like every major Wall Street shop wrote a note where they had some kind of discussion of a baseline assumption that there would-- there would be a contested result, or it'd be unclear on November 4th exactly who had won. As you think about the actual voting process, is that something that seems likely to you right now, that we might all wake up on the day after the election and it's not entirely sure who the next president will be?

GEORGE SEAY: I love watching the big banks speculate on politics, because they're often wrong and they never really know what's going to happen. So it's pure conjecture and speculation, and it's pretty rank at times, too. I don't think you can really handicap the odds of this election extending far out yet. We just don't know how some of the swing states are going to turn out. I think it's-- if former vice president Biden wins, he's more likely to win decisively, where there wouldn't be a whole lot of uncertainty.

If the president wins, it will probably a squeaker, and there may be some more uncertainty like that, especially with most of the people voting in advance being on the Democratic side of the aisle. I hope for the country we have a resolution the next morning, because it's bad for the country. We saw it in 2000. It's no good. And a pox on the houses of the supreme courts in the states that have allowed the counting to go on well beyond the election day. That's just bad for the country.

- Hey George, I want to ask you just about where to put your money post-election. So if we do get a result, then we're going to have a little bit more certainty in the markets. If we resume this upward trajectory, this momentum actually that we're seeing today, do you go back to what's been working, names like big tech, the stocks that have led us over the last six months, or would that be a time for investors to rotate into some of those undervalued plays or some of those value plays?

GEORGE SEAY: That's a great question, Seana. And I'm going to talk out of both sides of my mouth because I think the investors who hold Apple, Microsoft, Google, Amazon, all the big leaders that have been the whole market this year pretty much, I would not abandon those positions. There's really no limitation to what multiples on favorite stocks can go to. So I think trying to pick an exit point is a bad thing there.

But I would also encourage investors to look at sectors that have been really thrown out completely with the bath water. There's a lot of energy stocks and a lot of real estate stocks that deserve to be trounced, but there's several more, too, that have fortress balance sheets and are going to prosper in the future, and they pay you a whole lot of income while you wait. So I would use a barbell approach. I'd do a little bit of both.

- George, I do have to ask you about the news this weekend. You can call it a bombshell, I suppose, from the New York Times that Trump paid no income taxes in 10 out of the last 15 years, beginning in 2000. In your notes to us, you said that we're numb to it, that it won't move the needle, and it will basically just confirm how voters are feeling going into the election. What will move the needle? You know, thinking that things will stay the same until November 3rd, what would be a potential catalyst that could change the trajectory here?

GEORGE SEAY: Well, to your tax return standpoint, and then to that question, in 1990, in my state, and only people old like me remember this, our gubernatorial candidate, Clayton Williams, lost the election predominately because he hadn't paid taxes the last several years, while most people in the state were hurting. So it actually may move the needle. I just wouldn't bet on that because I think most Americans know Trump at this point, know how he conducts himself, and that he tries to avoid paying taxes at all costs through legitimate means, through deductions. And I don't think that's going to move the needle all that much.

I do think the debates could potentially move the needle a great deal. And I also think that the reaction of suburban women to the Amy Coney Barrett nomination could play a role, too. I'm not sure if that's going to move the needle, either, but to me, the Supreme Court second and the debates first, and how the candidates perform in the debates, could move people pretty aggressively one way or another.

MYLES UDLAND: George, we've certainly all come a very long way from Gary Hart's America. And I know you remember that one well. And certainly, I think that if we fast forward 30 years, people would be shocked at where things have gone. All right, George Seay, CEO of Annandale Capital. George, always great to get your thoughts. Thanks so much for joining the program today.

GEORGE SEAY: Thank you, Myles.