Defiance ETFs Co-Founder & CIO Sylvia Jablonski joins Yahoo Finance Live to discuss the latest market action as congress passes a new stimulus deal.
- Sticking with the markets here and really focusing on the movements that we've seen over the past couple of days, we want to bring in Sylvia Jablonski. She's the Defiance ETFs Co-Founder and Chief Investment Officer there. Sylvia, let's start with the market's reaction, or really lack thereof, yesterday and today.
We got the stimulus deal out of Washington. It's something we have been talking about for months. We thought markets were going to be so excited once we finally reached a deal. Yet it hasn't been able to boost stocks. What's going on here?
SYLVIA JABLONSKI: Hi, Seana, nice to see you today. You know, I think a lot of it is in line with what Emily just described. I think that with the spike in coronavirus cases and shutdowns, and you've got this news from the UK, for example, that there's a new strain that kind of prohibited travel. Here in New York City, for example, they kind of cut back on indoor dining, and the schools closed and all that.
I think the negative news around the virus is really what's keeping the market from kind of taking off. Yes, we needed this stimulus. And I think without it, we would probably see a bigger pullback than we actually did.
But until we really see the vaccines fully rolling out, people actually taking them, the result of actually taking the virus being a positive thing in the news, and getting the economy sort of opened up again, I do think that we'll continue to see this volatility that we're seeing, where we have pullbacks on a few days, and then the positive momentum around the vaccine kind of pumps the market back up. But it's kind of expected. It's volatility until we get the outcome there.
I do think that there is a slight amount of, as Emily said, uncertainty about what will happen with Congress as well. So I suspect that those two factors, getting some resolution there, will surely lead to probably the positive GDP growth and equity performance that we want to see in 2021.
BRIAN CHEUNG: Hey, Sylvia, Brian Cheung here. On the volatility bit, it does seem like we got a little bit of a nudge up to 25 on the VIX handle yesterday, although that seems to pale in comparison to some of the 30, 40 levels that we had seen earlier in this terrible year.
But I guess I'm wondering, as we look towards 2021, are there specific sectors that you have your eye on? I know you're closely watching the health care biopharma space. What do you see there for 2021?
SYLVIA JABLONSKI: Yeah, and look, I think that's a great point. But volatility also presents opportunity. So going back to what's going on in the market over the past two days, some of the high fliers that people have been afraid to get their hands on are on sale. So these are really good opportunities to buy on the dip.
So what do I think for 2021? I think the classic barbell approach works. So you buy on the dips in the areas that you thought were overpriced but you wanted to get in, whether it's Apple and the electric vehicles, or Tesla pulling back a little bit.
You know, I think looking at those names is good and then looking at some of the service sector types of names and cyclicals, like the airlines, that might be back up and running once fiscal stimulus comes through and once the coronavirus abates. But what I really love and I think is just going to be a massive generational opportunity, there's sort of no time for, and there's no better time than the present to get in.
You mentioned biotech. I love junior biotech. I like these small companies that are coming up with the cures, the elixirs. They're spending 70% on R&D to get to Phase 1, Phase 2, Phase 3, whether it's names like Denali or Mirati neurodegenerative diseases, cancer. They're having high double-digit performance, and I think that they're the names that take us into the future.
The macro story there, aging baby boomer population, FDA is big on approvals, peer approvals, fast track coronavirus. You know, all of these small biotech pharma companies are really poised to perform in coming months. And if you look at them, they're up three to four times the S&P 500 year to date. So I love that general biotech pharma story.
I think IPOs are all the craze. There's massive IPO enthusiasm. And looking at stocks, for example, is going to be a generational opportunity to give you access to the names that are the upcoming disruptive technologies and definitely seeing a lot of flow going there.
SEANA SMITH: Sylvia on that last point there, the IPO market, because the excitement that we've seen around DoorDash when it went public, with Airbnb in just the past few weeks, how much of that has to do with the retail investor and new investors here in this market? And then how much of it could be a warning sign, I guess, because that's what we've heard from some guests over the last couple of weeks?
SYLVIA JABLONSKI: Yeah, I think that's a great point. But there's another way to look at it. Like, the average IPO, and I remember this from when I first graduated business school, and we were working on IPO allocations. The people who get the IPO allocations at, let's say, $100 prelaunch are Warren Buffett. And then the stock goes to market. And within a day, it's a snowflake scenario, where it's at $300 bucks by the end of the day.
So the retail investor can't touch it. But when you look at SPACS, and you look at an ETF that encompasses all the different SPACS, you know, you're getting the most liquid-- the access to the most liquid SPAC IPOs and pre-IPO names, and you're getting access to things like Virgin Galactic and Draft Kings, and these are companies that are disrupting the future.
They're technologies that are going to take us to space. They're technologies that are going into AI. They're going into the world of gambling, whatever it might be. And I think that giving the retail investor access to this in the same way that Warren Buffett gets access to an IPO is just huge. And if you get a couple of high flyers in there, like MP for example, is a really good name to look at. That's a rare earth materials Company.
Since June, it's been up triple digits. Now, the average retail investor doesn't know anything about MP. But it's a new SPAC, and if they look at a SPAC ETF, it's one of the names, along with the high flying Virgin Galactic social capital Fisker type of names that are in there. So I just think it's a generational opportunity for a disruptive subsector.
BRIAN CHEUNG: I can't keep track of all these SPACS that are going on right now. But thank you so much.
SYLVIA JABLONSKI: Yeah, I mean, there's like three or four a day. It's amazing.
BRIAN CHEUNG: It's too many.
SYLVIA JABLONSKI: But it's super exciting to watch. And I think that, you know, 10 years from now, we'll be like, wow, like, look at these companies that started out as SPACs that we thought we forgot about for years.
BRIAN CHEUNG: We'll be following up on that, but Sylvia Jablonski, Defiance ETFs Co-Founder and CEO, thank you so much for joining us.
SYLVIA JABLONSKI: Thank you.