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‘We’re going to have a lot of tailwinds to our back going through 2021’: Expert

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E-Valuator Funds Chief Investment Officer Kevin Miller joins Yahoo Finance’s Kristin Myers to break down the latest market action as stimulus negotiations continue.

Video Transcript

KRISTIN MYERS: I want to turn now to Kevin Miller. He's the Chief Investment Officer at E-Valuator Funds. So Kevin, I want to start with this news of stimulus, given what Jess was just talking about, that it's essentially on the way. And given the weak jobs report that we saw on Friday, there's obviously still signs that the economy really needs help. However, we're not seeing markets right now really reacting to this news as this positive news on a potential stimulus package. I'm wondering how much of a boost do you think it's going to be providing not just the economy but also for markets when it arrives, especially since there are some mumblings that a stimulus check might not be a part of that package deal.

KEVIN MILLER: Yeah, the stimulus, I mean, we're coming off of one of the best Novembers we've had, what, since 1987. And so for us to continue that strong trajectory, even on decent, optimistic, positive news with the stimulus, it's a challenge. There's gonna be people that will take some of the gains off the table. Will the stimulus be a short-term shot in the arm? Probably not, because you can't infuse that money into the economy instantaneously. But it certainly will be in the not-too-distant future and is a much-needed supplement to us sustaining the direction that we're going.

You know, the other thing is, you know, the market is-- you know, even though the jobs reports and that, you know, may not have been as robust as everyone would have liked, this is just another indication of how forward-looking the stock market is. I mean, they're looking forward to the vaccines being out, to a stimulus package, and like you said just recently, an infrastructure package. All those things will prove to show that 2021 could be a very, very good year for the stock market.

KRISTIN MYERS: So to that point of some of the enthusiasm that we've been seeing in the market, which do you see is the next really big catalyst higher? Do you think it's vaccine news once we start seeing that the vaccine actually being rolled out to Americans, or do you think it could be that stimulus, that economic aid package? Which do you think markets are really tuned into most right now?

KEVIN MILLER: I think the vaccines will open our economy up faster than a stimulus package will help sustain our economy. And that's what's really going to propel us into the next level, and then we will have-- well, I obviously can't guarantee anything like this, but I fully expect that we'll have an infrastructure bill. And there are some really good companies out there that pay some really good dividends in the infrastructure sector, and dividends are where a lot of investors are going to be looking right now because interest rates are so low, and I don't really expect the Federal Reserve to raise interest rates all throughout 2021.

And, you know, there's an old axiom in investing, and that is you don't fight the Fed. So if they're saying they're keeping interest rates low, people are gonna have to look other places to get some yield. And infrastructure-oriented corporations like Fastenal, Eaton, Union Pacific, those are all good companies that pay a decent dividend that will benefit from the refurbishing of our infrastructure.

KRISTIN MYERS: So I know what you're talking about here. We've heard a lot of folks say, listen, right now the best place to park your money is essentially in equities. There's really nowhere else to go. And we have seen a lot of enthusiasm and euphoria in the markets lately. And this is something that readers of the Yahoo Finance morning brief would have noted a little bit earlier this morning, that there's been some warnings, the latest from Citi that these levels of enthusiasm historically precede some sort of pullback in the market. I'm wondering if you're also seeing some of those same warning signs, if you're hearing the same kind of anxiety from your investors that a pullback is coming up in the next couple of weeks or months.

KEVIN MILLER: Yeah, investors are always, especially in light of what we've gone through, you know, fourth quarter of 2018, you know, March of this year, they're all expecting a pullback. And somewhat realistically, we can expect a pullback when we've seen the runup we've seen, you know, over the last five weeks. But I will say that, you know, most investors shouldn't be in the stock market if they're concerned about what the stock market's gonna be doing over the next four to five weeks. I mean, most stock market-oriented investors should be longer term with their horizon, and they shouldn't be as concerned. It may give them an opportunity to deploy more cash, because we all know there's over $4 trillion sitting in money markets and in liquid investments, and that's waiting to be redeployed.

We're gonna have a lot of tailwinds to our back going through 2021. That's our perspective. And I wouldn't be trying to time, you know, a 3% or a 5% pullback. I would just go ahead, deploy into some good companies, and look long-term. I think you'll be rewarded very well.

KRISTIN MYERS: So let's talk about looking long term. What sectors are you liking for 2021? And I know you just mentioned some tailwinds going into the new year. Do you see, however, any downside risks in 2021?

KEVIN MILLER: There's always possibilities and probabilities when you invest, right? And so there's the possibility that we could see substantial regulatory change, and that could be an impact to the efficiency and how business operates. We could see an adjustment to corporate and maybe personal income taxes, and that could influence the number of jobs that are coming back in on the manufacturing sector. And then, toward the very end of next year, we could see inflation. And we really don't think the Federal Reserve is gonna adjust for inflation until they see inflation get up to 2 and 1/2%, 3%, which, by the end of next year, would actually be a very aggressive posture, but it could possibly happen.

So yeah, there's always the potential of some headwinds. But we feel that the momentum of where we're going with the economy opening up, the vaccines, infrastructure, amount of liquid assets on the sidelines waiting to be deployed with interest rates so low, I would just say there's possibilities on both things would transpire. But the probability of the tailwinds outdistancing the headwinds is much better for us throughout 2021.

KRISTIN MYERS: And last one here for you, Kevin, what sectors are you looking at? I know energy doing very well today. It has been doing a very good job over the last couple of weeks as investors are rotating out of tech. What other sectors do you really like for the new year?

KEVIN MILLER: Yeah, you know, we like renewable energy. We also like infrastructures, I'd already mentioned. And, you know, and for people to invest in energy-- renewable energy-- that can be relatively speculative. And so perhaps they should use or look at using an ETF. And if are looking more in the solar space, Invesco has a solar ETF T-A-N, TAN-- that's really-- that'd be a good way to enter into that sector.

And then also I had mentioned infrastructure before with three stocks, but there's also an infrastructure ETF. The ticker symbol is PAVE, P-A-V-E, managed by Global X. And that would be a great way for an investor that doesn't want to take positions into individual issues but still benefit from the growth of that sector, that'd be a great way.

And then I would not take my eye off Boeing. I think Boeing is going to have a great year next year, and I personally have acquired a sizable position in Boeing some time ago, and I wouldn't take my eye off that. If you look at what Boeing did to the Dow, for the Dow, in 2017, when Boeing was up over 90%, it could have a very positive influence on the Dow throughout 2021 as well.

KRISTIN MYERS: Yeah, one of the Dow's largest components up right now over 3 and 1/2%, looking over at . Boeing. Thank you so much, Kevin Miller, Chief Investment Officer at E-Valuator Funds. Thanks for talking to us today.

KEVIN MILLER: Thank you.