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'It’s a really mixed outlook for the economy,': Kayne Anderson Rudnick's Biel

Portfolio Manager at Kayne Anderson Rudnick Julie Biel joined Yahoo Finance Live to break down what investors should look for in the coming months in a post pandemic market.

Video Transcript

SEANA SMITH: Julie Beal, she's portfolio manager at Kayne Anderson Rudnick. And Julie, it's great to have you here on Yahoo Finance. I guess, help us make sense of the action that we're seeing today. Jared just ran through a number of moves that we're seeing across various sectors. We have the meme stocks rallying. AMC one of the standouts there, up just over 20% on the heels of its rally last week.

We have some of the reopening plays, namely airlines, also in the green. And then on the flip side, we have technology, once again, being an underperformer. How are you viewing today's action?

JULIE BIEL: I think it's just a continuation of existing themes, where we're just not really sure what kind of a reopening we're going to have. On the plus side, we're vaccinating well. And we're seeing good demand for goods and travel and entertainment. It's improving. But we still don't have the level of labor participation among women that we had, I mean, basically since the '80s.

And I think you see that being borne out in people not being able to hire as well. So I think it's a really mixed outlook for the economy. We really want things to work better. And so I think when people get enthusiastic about the reopening, it's quite an emotional reaction to chase things like an AMC or the airline stocks. But it's not really clear, fundamentally, if they deserve to run up quite this far.

ADAM SHAPIRO: When we talk about chasing stocks, maybe it's just chasing all kinds of assets. And my question, Julie, is how much are retail investors now driving the volatility we see, whether it be in equities or, for instance, crypto and those assets?

JULIE BIEL: So historically, retail had only been about 8% of trading activity. And if you look back last week, we had 15% of the movement in the markets was just AMC. And so that's primarily retail that's happening. We would guess that it's probably between 1/4 to 1/3 of the volume.

That's really significant because that is a market that's hard to really rely on. It's not moving, necessarily, based on fundamentals but a lot of emotion and information that people are finding on the web. So I think that's something to really keep in mind. It's going to create more volatility for the markets long-term. And I think it's something we all need to be aware of.

ADAM SHAPIRO: And so let me follow up on that. You're aware of it. It's your job. And the pressure is on you for your clients to keep an eye on that. But how do average investors cipher out the garbage or the clutter from what you've just shared with us?

JULIE BIEL: I think the most important thing is to focus on quality businesses. And that's how we invest. We're long-term investors. And we look for businesses that have structural protections around them.

And I would encourage all investors, retail or otherwise. It's not actually really that complicated to find businesses that have really strong and durable moats and to invest for the long-term. It's very exciting to see a stock like AMC go up 23%. But the fact of the matter is, if you're investing for the long-term, that's really how you protect yourself from events like March last year. You really protect yourself from the downside. And that is actually how you build long-term wealth.

SEANA SMITH: So Julie, can you give us some examples? I think some people are having a tough time figuring out exactly what some of those names are. So what have you come up with?

JULIE BIEL: So a company we really like is Encino. And this is a company that is helping banks modernize their front end. So all of us are very tired of our interactions with our banks. It's a clunky interface. And we've all gotten used to really elegant interfaces. And Encino really helps banks do that because we, as consumers, are expecting that.

It's a great company. The structural protections are deep around that business. Once you implement that software, it's very hard to rip it out. So that's a great company that's showing a lot of technology leadership.

Avelara is another one that I love. It's a business that's helping smaller businesses that are selling online e-commerce navigate the Byzantine tax structures that are at the state and local level. And it's helping them compete against the behemoths like Amazon.

Both of those businesses are disruptive. But they have a lot of protections around them that should give them a lot of earnings stability, which is what really helps you through a market cycle.

ADAM SHAPIRO: There's a theme in the two that you've just shared with us, which is tech and disruption. Is that where we should be looking if we're looking to deploy our capital?

JULIE BIEL: I think it's important to think about long-term versus short-term disruption, right? So we know that the way that we work has been disrupted and that that is a pretty stable thing. We are not sure exactly what the consumption patterns are of media.

So I'm a little bit more wary of a Netflix. But I think a company like DocuSign, which has fundamentally changed the way that we do business and we move paper around, that, to me, has more legs long-term. So when I think about disruption, it's really important that it be in the context of stability over the long term.

SEANA SMITH: Julie, when investors are trying to figure out exactly what to buy right now, a lot of that has to do with where we are in this recovery. The econ data that we've gone out over the last couple of weeks kind of has conflicting signals. What's your view just on where we stand in this recovery?

JULIE BIEL: I think it's really a mixed bag. It's really a question of, yes, there are a lot of young people who are really enthusiastic and ready to get out there, ready to go to bars, et cetera. And then I know a lot of moms who are fully vaccinated and terrified to still go out into a grocery store.

If you're a parent, like me, of a three-year-old, are you enthusiastic about taking your sticky child on an airplane? No, not really.

So I think it's going to be pretty uneven. There are going to be signals that the market, that the economy is doing great and people are out there and spending money. But there are also signals, to me, that there is hesitation and there's concern about what a resurgence looks like in the fall and the winter.