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PREMIUM: Trading Post-Election Scenarios for Stocks, Bonds and Sectors

In this article:
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John Eade, President and Director of Portfolio Strategies at Argus Research, joins Yahoo Finance's Jared Blikre to break down potential stock market moves after the U.S. presidential election. Using historical market statistics, they'll handicap which stocks and sectors will benefit or suffer from a Trump win versus a Biden win, as well as the potential for a blue or red wave.

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Video Transcript

[MUSIC PLAYING]

JARED BLIKRE: I want to thank you all for joining our fifth Yahoo Finance Premium webinar, Trading Post-Election Scenarios for Stocks. I'm Jared Blikre. And not a lot of surprise that we don't know yet who the next president is, but we're going to tackle lots of questions here, like what should investors focus on as the vote count keeps playing out, what to expect from a contested election, and what sectors are likely to do well, depending on the outcome of this all.

And to help us, we're soon going to be joined by John Eade. And he is the president and director of portfolio strategies at Argus Research. And Yahoo Finance Premium members might recognize the name of that firm, as they provide many of our research reports. We're going to take a deep dive to show you how to get the most out of Yahoo Finance Premium, how you can use it, find stocks that are showing promising-- or signs of promising returns, and also how to analyze your portfolio.

And now a few housekeeping notes on the BlueJeans webinar software that we're using. You'll be able to interact with us in real time, and that's through the BlueJeans secure video conferencing platform, now part of Verizon. And we're going to be running polls for the next 45 minutes, which you're going to see in the right-hand tab of your screen. So I think it's going to be that way.

And you can post questions at anytime using that same tab on the right of your screen. Feel free to use your real name, or you can also post anonymously. Also, if you want to adjust the size of me or a guest or any of the content we're showing, the lower left of your browser window, there are some sliders. You can use that to make any adjustments.

All right, so let's get started. And I always like to begin with a poll to get your reaction to something to your market knowledge. And this one is going to be a little bit trickier than usual. But it's going to be instructive. And this is something that we're going to tackle in our presentation today. So at the right-hand side of your screen, you can respond to this poll.

And it is, these stocks benefit the most when long-term interest rates are low and the yield curve is flattening. Is it growth and value stocks, value and cyclical, growth and low volatility, or defensive and value? All right, so let's take a brief moment to contemplate everything that's happened overnight because it has been a whirlwind.

We had-- it looks like-- OK, for the record, it looks like there's almost no chance of a blue wave. And I think that has to do a lot with the price action. We've seen a flight into bonds. We've seen a flight into growth stocks, those big cap names, and also those really momentum names that have driven so much of the rally so far.

And they've been kind of left going sideways to down over the last couple months, mainly since the beginning of September, which is when we saw that blue wave first being priced in. But I want to bring in John now and get his take on the situation. John, what are you making of all the news and the market movements?

JOHN EADE: Well, Jared, thank you for having me on this afternoon. And thanks for all the participants for joining. Certainly looking forward to this. Jared, I think it's just a big, big, big sigh of relief that we're seeing in the market today. There's relief that the campaigns are over. There's relief that the voting has been completed. There may be a recount or two, but, you know, we're getting ready to move on.

I think there's also relief, as you said, that it looks like there's going to be gridlock in DC, without one party dominating. And that may be good for the tax aim that we have right now, as well as for any kind of antitrust issues on the big tech names. So I'm not surprised that those stocks are rallying, based on the results that we've seen so far.

JARED BLIKRE: Yeah, and I know you've gone through a bunch of these different scenarios. And I want to tackle a couple in particular. You have an overview. Trump wins, Biden wins. Can you just give us some of the general principles that you're looking at and how that would guide investment decisions?

JOHN EADE: Sure, so if Trump wins, we don't think a lot really changes from what investors have had to work with for the past four years. You know, the good news is that the tax rates are a lot lower. That makes our corporate profits higher and supports the high valuations and high stock prices we've had. So low taxes has been a good thing.

You know, Trump had launched these trade wars against China, against Canada and Mexico, and even against Europe. And that created a lot of uncertainty for specific sectors, like the industrial sector or the healthcare sector. So those may be, you know, more poised to benefit if Biden is going to win, and the threat of the trade wars disappears.

Both candidates have talked, Jared, about spending a lot of money on rebuilding the infrastructure. That is obviously good for companies like transportation companies, the construction companies.

And that kind of spending also tends to inflate interest rates, and you get a steeper yield curve. And that's good for the lending companies like banks and regional banks. But that's something I think that we're going to see, no matter who wins, Trump or Biden, an infrastructure spending plan.

JARED BLIKRE: Yeah, I think a lot of people are waiting on pins and needles for that. And hopefully, regardless of what happens with the election cycle, they can now focus on that. But before we-- well, let me do this first. I want to get your take on the potential for a contested election.

It looks like the Trump administration already went to the courts in Nevada. But then there are threats that they're going to go to the courts in Pennsylvania and perhaps other states, maybe Arizona, Georgia, some of the ones in play here. What happens if this is more of a long, drawn-out affair? Is that priced in?

JOHN EADE: I don't think that's priced in right here, Jared. You know, the race is obviously very, very close. And in some of these battleground states, it's down to 10,000 or 20,000 votes. So I believe most state election laws allow for a contestant to order a recount if the votes are close. So I think we're certainly going to see some recounts come in.

The legal tests we've seen so far from the Trump administration have not gone the Republicans' way. They've upheld the current voting setups and standards that have been approved in states like Texas, for example, and in Pennsylvania.

So I think the question then, Jared, is, how long would this be drawn out, right? If it's to the end of the week, you know, probably not an issue. But if it's to the end of the month or the end of the year, and you don't have that certainty about the direction of taxes or perhaps interest rates or regulations, we know the market certainly doesn't like uncertainty. And I think that would help quell this recent rally that we've had this week.

JARED BLIKRE: Well, yeah, we actually spoke with Niall Ferguson on one of our shows earlier today. And he talked about this very issue. Let's take a listen.

NIALL FERGUSON: And big tech is beginning to look like the new safe haven when people don't quite know what else is going on. So my sense is that this rally is a rather fragile thing. Remember, as I've said, the president shows every sign of contesting this. We have a scenario in which we could end up with Joe Biden getting to 270 electoral college votes if he is declared the winner in Michigan and Wisconsin and maybe in Georgia, as well as Arizona. And the Trump campaign is simply going to say, no, we don't accept that.

But at the moment, what I'm really concerned about is that this becomes a contested election, far more hotly contested than in the year 2000. And we don't have a clear result not today, not by Friday. This could drag on in that scenario for a long time. And I think that's-- I think investors will lose their nerve if they start to attach a probability to that kind of a scenario.

JARED BLIKRE: Any kind of drawn-out affair with regard to a recount or challenges is not priced in right now. Personal thoughts for me is it would be a buying opportunity. Political events like this tend to be one-off. And I think COVID is not-- it's an apples and oranges comparison, but you saw how quickly things got priced in at the beginning of the year.

So what I want to do now is get to an audience question. And this is going to be from Bonnie. Do cannabis stocks have a better outlook if Biden wins the election? And I think what we saw last night, first of all, the state referenda-- and I think weed was legalized in four or five states last night. I think that's more controlling.

But at the national level, the fact that the Senate remained with the Republicans probably doesn't get us incrementally towards the nationalization of any kind of weed bill or to make weed legal. But I will take a shot at doing some technicals on a sector ETF called MJ. It's the ETFMG Alternative Harvest ETF. And this has been under a lot of pressure.

And let's see here. I'm not seeing much price reaction. Overnight, it was up, I think, 6% or so. And then now it's in the red, 2.27%. Whatever is happening right now, this has kind of been dead money for a long time. It's going to take more to get it started.

And I do know that in Canada, they kind of got ahead of themselves. They legalized it, but then at the same time, they didn't enact the regulatory structure enough to allow them to ramp up at overproduction. So, kind of fell into from bubble territory into dead money territory.

I think it's going to come back. But it's going to take more time. And I don't think this election is going to be the catalyst. John, you don't have-- if you don't cover this space, you don't have to answer anything. But if you have some thoughts, feel free to offer them here.

JOHN EADE: Sure, Jared. Yeah, Argus doesn't have any of those stocks under coverage yet. Typically, we cover larger cap companies. And the marijuana stocks have been more small cap or micro cap.

A couple of the companies we follow have talked about getting into the business. Constellation Brands, that has-- it's a beer and liquor company. So they've got a lot of distribution. And I'm sure Philip Morris and Altria are, you know, looking very closely at this part of the market as well. But I think they would most likely wait for a signal from the federal government, rather than to go state by state.

So as you're looking at individual companies, yeah, Jared, at Argus, we have a six-point system our analysts use to analyze companies. They look at growth. They look at management, financial strength, risks, industry, and valuation. And for these smaller companies, I'd really focus on financial strength. That's got a long way to go before it works out. So you want to see a strong balance sheet to carry a company through, you know, what might be some challenging quarters.

JARED BLIKRE: All right, good thoughts there. And I want to read the results of our first poll, and then we'll take another one. So these stocks benefit the most when long-term interest rates are low and the yield curve is flattening. The number one answer was growth and value. That's 40%, but not correct. Value and cyclical, that's 20%. Also not correct.

Growth and low volatility, 22%. That's the second most respondents who answered, and that is the correct answer, at least based on the last year's correlations. And then, finally, this defensive and value, that was only 18% and not the correct answer.

But where I was going with this is, we've seen, as the yield curve compressed, as the long-term rates went from 3% down to 2% to 1%, all the way down to, I think, 35 basis points, which is just insanely low for the 10-year yield, it kind of gets into a situation where there is no alternative. You need these big growth names because you're not expecting growth in the overall economy. So you've got to go somewhere else.

And then you compare that with the spread to something like the US 10-year. And if the dividend yield is substantially above that or just the total return, because it's a growth stock and they don't have any dividend, that's where investors are going to put their money. But as that reverses-- and this is what we saw at the beginning of September and a couple of times before in the rally this year since March-- that kind of reversed.

And so we saw this rotation into value and cyclicals. And I'd like to get-- John, I'd like to bring you back in and maybe talk about some of the sector action that we could expect. Let's take tech and financials. And call out any tickers you want me to hit, and I'll pull them up here.

JOHN EADE: OK. Jared, let me add something about the low interest rates and growth. You know, a lot of valuation models seek a net present value. And the analysts are calculating profits way off in the future and then discounting them back to net present value.

And when interest rates are low, those discount rates are lower, and those future profits are worth more. So low interest rates just kind of naturally guide investors toward growth stocks because the future growth is going to be worth a lot more in a low interest rate environment.

And we've now been in a market for probably 10 years that has favored growth stocks. And everybody says, well, when is value going to come back? You know, it's not a flip of a coin. And as long as these interest rates are low, I think you got to keep focusing on growth.

And, you know, the top growth sectors are technology, which we're talking about. And then in-- financial services more of a value sector, but there are growth areas in financial services, like some of the credit agencies, like a Standard and Poor's, SPGI, or in an MCO. Why don't you call up those charts?

JARED BLIKRE: [INAUDIBLE] here. Let's do MCO, which I'm dialing in right now, and I'm going to share my screen. You can pull down that slide. Excellent. And you should be able to see Moody's right here. So what are you seeing in this chart? And we can also use this opportunity to bring up some of your research reports within the YFi YF Premium, if you indeed have one on this. And if not, we can just do it with another ticker later.

JOHN EADE: Can you spread that out to a five-year chart, Jared?

JARED BLIKRE: Sure. Here we got five years, and my, that's a nice run.

JOHN EADE: Right, that's a pattern we love to see at Argus Research. You know, a long string of higher highs and lower lows, just a bullish up. And you can see the sharp down in March, right? It came back down to the 200-day moving average. But now it has picked that positive bullish pattern right back up again.

So this is-- again, this is the kind of company that is-- it's a growth company. It's growing revenues and earnings about 10% to 12% a year very consistently. And in a low rate environment, you know, that growth is highly valued. So we do have some stocks we like in the financial sector. One that we have on our list is JP Morgan, the bank stock leader.

JARED BLIKRE: Yeah, got it right here. And--

JOHN EADE: Yep.

JARED BLIKRE: --they've been in this incredible consolidation pattern. You can see just breaking above the 200-day moving average recently for the first time since February, since the sell-off. What are you seeing in the fundamentals and technicals here?

JOHN EADE: Well, kind of a rule of thumb at Argus, Jared, is-- you know, we cover these large cap companies. They're typically very well managed companies, strong balance sheets. And they don't often sell for a value. And a value signal we like is a dividend yield of 3 and 1/2%. That's twice what the S&P 500 dividend yield is. And it's very attractive in a low rate environment. And that's where JP Morgan is right now.

So the flat yield curve does not help them with their loan business, their spread business. They do have banking business, investment banking business. They do have brokerage business. But this is, you know, I think a good value here for a well managed company and a clean balance sheet. It's a bit of a contrarian call, but, you know, a lot of people are looking for income in this low rate environment.

JARED BLIKRE: Yeah, and I just want to bring up here that we're in the Yahoo Finance Investment Ideas of the Premium package. And this is something that I do one of these. I pick one of these just about every day and present them on air. And I specifically looked for the most recent call on JP Morgan. It looks like it's October 13 here. Bullish call looking for a 22% upside to 100.91.

If I click this, it just gives a brief summary of your research report here. And we can also see all of those reports and get the full length one, which is right here. And any thoughts-- how does somebody navigate through this? And how have you geared it towards being as friendly to the investor as possible?

JOHN EADE: Well, thanks, Jared. Yeah, we're real proud of our analysts. On average, they've got 19 years of Street experience and 12 years experience working with me at Argus. So they know our six-point system. They know what our clients like. Our clients tend to be long-term buy and hold investors.

Our reports are written to echo our six-point system. So they're broken into different sections. They tend to be four or five pages long. And then there's some charts and graphics in them. And then each report is going to contain a discussion of a company's growth outlook and earnings estimates, a review of the balance sheet and the key financial strength criteria we look at.

We'll comment on the management and on the risks. We know most of these management teams-- again, our analysts have been covering these companies forever. We listen to the conference calls. We talk to the management teams. Then we'll also have a segment on valuation. And if you don't want to read any of that, our reports start off with four quick bullet points summarizing what we're talking about in the report, and then our investment thesis in which we defend our buy, hold, or sell rating.

JARED BLIKRE: Got it. Well, I'd like to get to our next poll. And that is going to be in the US presidential cycle, this year has had the best gains on average. Is it the first year, second year, third year, or the fourth year, where we are right now, next year being the first? All right, you can, again, use the right-hand side of your screen in order to access and vote in that poll.

And now I'd like to take a couple questions. We got one. Let's see here. Sectors expected-- and this is from Deborah. What are the sectors expected to survive and thrive the election and virus in 2021? I would take this, is there any sector that's kind of immune to whatever might go on here? Or is it simply a portfolio mix? Is it having that balance there, John?

JOHN EADE: A couple of ways to think about that, Jared. I do think there are some sectors that are, you know, relatively immune to what's going to happen in the White House. And these reflect more secular themes that we think are present and growing.

For example, cashless transactions, right? That's kind of a blend of financial services and technology. That certainly is the way that commerce is going. And so you've got companies like Visa and Mastercard and PayPal and Square that are in this, you know, fintech cashless transaction sector. That's one idea.

Another idea is in the pharmaceutical segment. A lot-- you know, both Biden and Trump have targeted the drug sector or price controls. So that's going to cap potentially revenue growth for the big pharma and biotech companies.

And so they're looking at generating growth by improving margins. And they're outsourcing a lot of their R&D and drug manufacturing. So there's a new segment that's built up, called the biopharmaceutical outsourcing solutions segment. And companies like Catalent and Thermo Fisher Scientific are leaders in that area.

I think regardless of who wins, supply chains are going to be built here in the US. If Trump wins, they'll be rebuilt because of tariff. If Biden wins, they're going to be rebuilt, you know, because of the threat of COVID-19. Now you're looking at logistics companies, at trucking companies, at air freight companies, at railroads. So those are three themes that I think, you know, have a spot in portfolios right now, no matter who wins.

JARED BLIKRE: Yeah, it makes sense. And I want to get to a couple more questions here. Lots of interest in the electric vehicle space. So how is the EV industry affected by this? And I'll just give my take first. I think EV is coming no matter what. You get the battery costs down, and pretty soon, the Model 3 in, let's say, five years, by Tesla is going to be cheaper than a Toyota Corolla, potentially.

And so I don't think there is anything stopping that juggernaut. Could it have been sped up? Absolutely. I think once the blue wave scenario was out, probably a little bit less likely. But with a Biden administration, there are going to be probably more regulatory headwinds against oil companies and also companies that produce internal combustion engines. And John, I'll just get your take here.

JOHN EADE: Yeah, so, right, electric vehicles are certainly a Biden wins industry, at least in the near term. But I agree with you, Jared, over the long term. And I think, you know, one kind of not so obvious investment play that investors have done has been to short the energy stocks, right? If everybody's going to be driving electrical vehicles, electric vehicles, they're not going to need gasoline. And we've seen the energy ETF-- there you go. Why don't you look at five years, Jared?

JARED BLIKRE: Sure thing. Woo. Not pretty, huh?

JOHN EADE: Painful, painful. So that's the market staying, you know, electric vehicles are coming, whether it's in a car by Tesla, whether that's coming from Google's Waymo subsidiary, which will probably be IPOed at some part, whether that's PACCAR makes giant trucks and is experimenting with electric trucks, as is Tesla.

And then Cummins and Eaton are both suppliers in that industry supply chain. And they're retrofitting their operations to be ready for electrical vehicles-- electric vehicles as well. But several stocks we follow and on our buy list are poised to take advantage of this trend. Let me say, Jared, that we also make recommendations on sectors. And we've had a long-term underweight on energy. So, you know, maybe you've got a paired trade there, a buy a Tesla and a short the energy ETF.

JARED BLIKRE: Yeah, interesting. And well, somebody else brought up the question, which I'll just field now, because I want to get it. I think all this energy talk makes a lot of sense, and we're going to stick on with it for a minute. But they were asking why Tesla became kind of decoupled from the market in the first place.

And from my perspective, yeah, it's about the EV space in general. But it's also about the future prospects for Tesla. You know, they have that huge IP mode potentially. They're gearing up in so many different fields. I think the end game is driverless cars. And that's where they have the most potential to excel. And I think that's why people-- investors are giving them such a high PE multiple.

But also, after the COVID selloff, money had to go somewhere. And Tesla just emerged as a very strong, growth-oriented company, and it became an investor favorite. So, Tesla, which is incredible to say now, almost became a defensive play, which I never would have thought a year ago, especially two years ago.

So I'll ask you about that, John, and also get your thoughts on-- you mentioned energy. It is a nice dividend play there. Exxon is up to about 10 and 1/2% now. But is that just asking for trouble? Could they cut the dividend? Or do you simply not want to be in the energy space?

JOHN EADE: OK, so let's go back to Tesla for a moment. And we have-- our analyst who follows it has followed it for several years. And he had a buy on it most of last year, moved it onto the hold list in the early days of the pandemic, but has now put it back on the buy list. And it's a hard stock to trade. I mean, there's a lot of volatility.

But then there's just so much news. There's plants that are open or are not open. There are strings of quarters of profits, which he's finally done. There's a stock split. And with this-- again, we talked about it earlier with the low interest rate environment-- investors are looking for growth.

So, you know, the pack has caught hold of Tesla. And I think if you're going to sign up for it now, I think you've got to be thinking out, you know-- it's not like a year end type thing. This is going to be a part of your portfolio for three or four years. And you're going to live through some of the volatility.

[INTERPOSING VOICES]

JARED BLIKRE: Oh, yeah, I was just going to ask you for your quick follow-up on Exxon.

JOHN EADE: Yeah, so dividends are something we look at real closely, Jared, at Argus. They're an important part of total return. They tell you a lot about a company. They tell you if a company is paying dividend, that the company has at least a strong enough balance sheet to support a dividend.

They also give a signal. If a management is increasing the dividend, then they're pretty confident about their near term outlook. And if they're increasing the dividend at a double digit rate, especially during a pandemic, that's a real signal of confidence. So, you know, we're trying to identify those companies that are paying dividends and are growing them at a double digit pace.

And let me tell you, those yields aren't 10%. There's no 10% yield that's growing its dividend at a double digit pace. And, in fact, I think any dividend probably above 7% or 8% is pretty much at risk here, I would think.

The one company that our analysts does like among the major integrated companies is Chevron. He feels they have the strongest balance sheet. They generate the most cash flow. They just did a deal. They bought another oil company and has increased their proven reserves. And the yield-- I think the yield is 7% there. It's not 10%, but there's certainly more confidence that Chevron is going to hold onto its dividend.

JARED BLIKRE: All right, I want to get to the response from our last poll. And we have here poll number one. Is the US presidential cycle-- in the US presidential cycle, this year has the best gains on average. First year, second year, third year, fourth year. Correct answer is third year. 33% of you and that is the number one response. That is correct.

And so that was last year. Now it's the fourth year. We're going to get into some seasonality stuff with John in a little bit. But first, I want to get to the Fed, because guess what? The Fed meeting started today with everything else going on. And we get that big Fed decision tomorrow at 2:00 PM. Jay Powell gives his presser at 2:30 PM, maybe get some fireworks, maybe not. But I think the onus is going to be on him.

So let's get to a question here. Brooks is asking, what is the consensus view outlook for interest rates, short term? In other words, one year or longer term, for instance, three to five years? And that's the key question. That's what makes people the big bucks, at least Jeff Gundlach.

If you're asking for the Fed's consensus, it's always going to be wrong. It's usually going to be too high. They expect to lift off way sooner than they're actually going to. I think they might have finally come under some different-- they're coming from a different direction now. They've changed the communication strategy. And even with that, I wouldn't rely too much on their projections.

But we're going to find out. I think with the blue wave out of the realm of possibilities here, I don't think we're going to see a tremendous expansion or reflation. But we should see higher, longer term rates.

And as an expanding yield curve, as we go forward, as we slog through, get vaccines, get more confidence in the ability to travel, go out to restaurants, businesses start flying their people, their employees to business meetings again, you put all that together, I think we do have higher interest rates. But it's going to be full of fits and starts. And John, what's your thoughts on this?

JOHN EADE: Yeah, low rates for a long time, Jared, is what I would say, at the short end and at the long end. In fact, we're seeing interest rates come back down just today. They had been ticking higher for a few weeks. But on the news of the gridlock and the no blue wave, they're coming back in. And they're reflecting outlook for an economy that, sure, it just grew at a 31% rate, but isn't probably going to grow more than 2% or 3% each quarter over the next several quarters.

The Fed has gone on record saying they're not going to raise rates at least through 2021. I think you're right on that, Jared. It's probably a year or two after that. They've also gone on record saying, you know, they're not going to worry about inflation slightly higher than 2%. Right now, it's well below 2%. And so we're a ways from that.

You know, what seems interesting is that, you know, the world is OK with that, right? Global investors are buying US Treasury securities in a show of confidence in the US. So they're kind of saying it's the right strategy for the US to recover from the coronavirus. But again, the implication of low rates for a long time is, as we started off the show, look toward growth stocks.

JARED BLIKRE: All right, and we have-- we actually interviewed Bill Dudley. He's a former president of the New York Fed. We interviewed him last week. And here's what he had to say about some of the Fed's problems or potential problems.

BILL DUDLEY: The problem is that the efficacy of monetary policy is rapidly diminishing. I mean, the Fed could do more asset purchases. They could keep rates lower for longer. They could even contemplate doing things like yield curve control or moving to negative interest rates. But would it really make a difference? I think the answer is no.

The Fed has done what it can do to basically make financial conditions accommodative and interest rates very low. We're already seeing the interest sensitive sectors of the economy doing fine. So if the Fed did more, what would be the effect on the economic trajectory? It would be very, very modest. That's why I think you'll continue to hear from Fed officials the need for more fiscal stimulus.

We fell off the fiscal cliff at the end of July. It hasn't had much negative consequence up to now, mainly because the fiscal stimulus was so large, and it boosted household savings. And because the re-opening of the economy that we saw through the summer into the fall also helps support economic activity.

But if the reopening of the economy is stalled and the fiscal stimulus effects from before wear off, I think you definitely are going to see the monthly economic statistics show a distinct weakening trend in coming months.

JARED BLIKRE: It gets back to pushing on a string, doesn't it? Everybody's afraid the Fed might run out of bullets, especially as the stimulus is in limbo. But it kind of gets back-- he mentioned yield curve control. So I do want to ask you, John, one follow-up question. The Fed has threatened to basically bring down long-term rates-- in other words, directly act on the long end of the curve. And that's usually, they just end up acting on the short end.

So by acting on the entire curve, suppressing long-term rates, kind of flattening the curve there, does that affect your outlook for interest rate sensitive sectors like financials, especially which are so susceptible, their net interest margin is susceptible to the yield curve, John.

JOHN EADE: Yeah, so that's going to be a real challenge for the big money center banks like a Wells Fargo and a JP Morgan, and also a challenge for the regional banks, which do a lot of mortgage and auto lending.

But it's definitely a positive for the homebuilding industry, right? And for home sales and for the companies that benefit when you buy a home, the Home Depots, and the Mascos, and the Lowe'ses, and the Generac's, right, 'cause everybody's gotta have a generator now with global warming and storms. So, yeah, bad for banks, but good for the housing and related industries-- you know, low interest rates for a long time.

JARED BLIKRE: We're ready. Here we do. All right, we're going to go to poll 5, talking to my producers here. Historically, the best quarter for stocks in any given year is, A, the first quarter, B, second quarter, third quarter, or the fourth quarter? And we'll be reading those results shortly.

But I want to take this opportunity to go over some of the features in Yahoo Finance Premium, and especially since we have John here from Argus Research. And I'll just go over our draft-- excuse me, our dashboard page here first. Share my screen so everybody can see it. And there we go.

So this is home base. And portfolio performance, you can automatically import all your positions from your brokerage in a few keystrokes or mouse clicks. But I just did this one arbitrarily. I set it up. And so it's showing me my watchlist versus the S&P 500. Threw some lucky darts at the board right there, but it is outperforming by quite a bit. Looks like about 28 basis-- or 2,800 basis points, rather.

And then we have investment ideas. This is where I spent a lot of my time looking at the fundamental and technical, I guess you would say recommendations. And on the fundamental side, those come from Argus Research, where John is president. Here we have research reports. You can access those Argus Research reports directly. We took a brief look at it, and we'll take a look some more.

Here we have a measure of fair value using the Peter Lynch method, and this will tell you, in your stocks, are they overvalued, undervalued? It's not a one-dimensional-- it's just-- it's not a one-dimensional factor in the investment. It's just one of many factors in investment. So a lot of people look at that.

Then we have the company outlook, and this is unique. I haven't seen this any place else. And it gives you a look at a company like Uber based on its innovation, its hiring, sustainability, insider sentiment, earnings, dividends. Well, Uber is not paying any dividends so we're not seeing any there. Also get some ESG scores for them.

Technical events, that is a complement to our fundamental reports by Argus Research. And at the top here, we can look at a couple of different things. I like to look at risk level because this will automatically assess the risk level in your report-- excuse me, in your portfolio. And it will tell you the beta-- how levered it is, I guess you could say, to the general market. Level of volatility. It'll show you if you're too concentrated in tech or communications services or some other sector. And it's all right here in the dashboard.

So, John, I will bring you in now, and we're going to look at some investment ideas, some recent ones that just came in from your firm. And when I look here, here, for instance, is eBay. This just came in today. And since we're coming off earnings season, we got quite a look-- quite a lot of these to look at. But this will tell me just in a snapshot-- you were talking about those bullet points that precede your reports. This is just a snapshot of the report. We can get the full thing. Any thoughts on this and how investors can use it?

JOHN EADE: Oh, yeah, definitely, Jared. So yeah, our analysts are going to be coming up with probably 15 or 20 of these ideas a day. Buy, hold, or sell. You know, if you're looking at your portfolio and you own this stock or thinking of owning it, you know, it can give you some reasons why you should continue to hold it or why you should buy it, or maybe why you should sell it and look to pick up something else.

Jared, let me direct you to another spot on Premium that has a bunch of ideas, too. So if you can go back up toward the top-- no, right, on Research Reports. Stay on Research Reports. And then go down to report type in the middle there.

JARED BLIKRE: Got it, yeah.

JOHN EADE: And then click on Thematic Portfolio. These are where we have portfolios based on different themes we like. And I talked about double digit dividend growth. Well, Jared, there is our August dividend growth portfolio. And if you click on that report--

JARED BLIKRE: This one or this one right here? Dividend [INAUDIBLE]?

JOHN EADE: Yes, that one. That one is international dividend.

JARED BLIKRE: Got it.

JOHN EADE: It's going to give you reasons of why dividend growth is a valid strategy. It's going to have a list of 30 stocks that meet our double digit dividend growth criteria. So, you know, you've got a portfolio already for you right there.

JARED BLIKRE: And what would you be recommending to invest-- what's-- OK, we've got a few minutes left, just a few. What's your biggest takeaway here for investors navigating through the next few weeks? What should they look out for? Should they be waiting to see if the election is resolved, you know, inside the courts, outside the courts? Just your general thoughts here for investors.

JOHN EADE: Yeah. Yeah, Jared. And we've done a lot of that this year. There have been these incredible events, right? There's COVID-19. There's a 30% drop in GDP. Now we've had this election.

We've really gone back to what I talked about earlier, our six-point system. And during the pandemic, you know, we focused a lot on balance sheet and management. A strong balance sheet will carry a company through the pandemic, and an experienced management team will lead them to the other side. So it's really the fundamentals.

And now we're working our way through the pandemic. The balance sheet is still important. But I think people are looking toward the other side of that pandemic and back to growth. Which companies have delivered growth during this pandemic? Which are poised to deliver growth on the other side?

And we cover that in our different reports and in our different lists. We've got an innovative growth list. We've got a dividend growth list. So we're very focused on growth here as we move through this pandemic.

JARED BLIKRE: All right, we're going to read the results of our last poll. And we can take one more question, and then we're going to say goodbye here. Now, the-- historically, the best quarter for stocks in any given year, the number one answer is the fourth quarter. And you guys got it right. 35% of you said the fourth quarter. Second most popular answer was the second quarter, 26% responding.

OK, I'm going to take this question here. Why-- and this comes from Mariana. Why is the solar sector dropping with the results that we have so far? So I've been watching this ETF called TAN. It is the Invesco solar ETF, and I'm going to get it on the screen here in a second. There we go.

This has been a really great sentiment for the blue wave. And it was in the beginning of September that the blue wave started getting priced in. And that's when this ETF-- you can see it's already been on a great run, but it really, really took off. It went exponential and kind of got overdone here. And as the prospects for a blue wave started fading incrementally about a week ago, maybe two weeks ago, we just-- we saw some-- you call it profit taking or hedge taking there.

So I think that the blue wave caused solar to get overdone. But it's definitely not counted out here. And you look at the run that the stock has had since the March lows. And now the stock-- well, ETF and the stocks underlying it, they still got some gas in the tank. But I would watch the 50-day moving average. If you're a short to medium term trader, this provides an excellent stock. You can see how it's been respected a couple of times here. So, John, any quick thoughts on that before we exit?

JOHN EADE: I think you're right, Jared, on the cause for the selloff. So, again, you're to look at the fundamentals. We've got First Solar, FLSR, on our buy list. And the stock's run up. You've got this non-fundamental selloff here. So we're going to look at that as a pretty good buying opportunity.

JARED BLIKRE: All right, got it. Well, John, I want to thank you so much for joining us. I want to thank everybody in the audience here for watching this today. And we do this once a month. So we're going to be back the first Wednesday of December. That is December 2nd at 2:00 PM. I hope you'll join us for that. We're going to do something a little bit different than talking about the election for too many months. Hopefully, we're not talking about it then. Good bye.