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The stock market and economy aren't connected at all times: Bleakley Financial Partner

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman speak with Bleakley Financial Partner Andy Schwartz about how he's advising his clients amid COVID-19 and market uncertainty.

Video Transcript

- Andy, great to have you on the program. I'd love to talk just kind of broadly about how you've seen the markets this year and how you've talked about it with your clients, considering all that has happened and, I think, all the changes that perhaps are anticipated as we get into 2021.

ANDY SCHWARTZ: Well, it's certainly been an interesting year. I think in March, April, I would've made a bet with anybody and sold my soul if we could have just held on to what we had made last year. And then, obviously, you know there's been a complete, you know, reversal, a turnaround in the markets. I think what everybody has to understand and what clients struggle with the most is that the market and the economy aren't necessarily directly connected at all times, especially right now. I mean, the economy, it's gonna start to struggle a bit. You know, we're having this resurgence of, you know, the virus.

And so clients are asking, if things are slowing down, if things are starting to shut down, not 100%, but around the country, why is the market responding so favorably? And obviously, the market's responding for two reasons. One is because the market's forward-thinking, and with the vaccine news, the market knows that eventually this will be over. So the market's sort of past that. And so it's important to remind people, you know, that they're not particularly connected.

- You know, it's an interesting way to frame that, I guess, from the clients that you're talking to, Andy, because we see, you know, in retailers, grocers, those executives are talking about some of the consumer behaviors from the spring starting to come back now. And I suppose would you echo that in conversations you're having with clients, where some of their fears from the spring have started to come back, and you are finding yourself once again trying to reinforce to them what financial markets are seeing that is not happening in their daily lives?

ANDY SCHWARTZ: I think you wouldn't be human if you weren't feeling a little uncomfortable after living through we lived through in the spring and then just watching the news and all the things are going on in various states as far as shutdowns and regulations, you know, and seeing what's happening in the hospitals, I mean, it's serious. You know, the virus is definitely revisiting.

So I think everybody has that fear, but I think the difference is in March and April, we had no idea how long this would last. And when you listen to the experts and the professional community on the health care side, the idea that, one, it's possible there would be no vaccine, right, for certain types of viruses. And two, it could take a multiple, you know, it could take two years.

And now, here we are, sort of on the cusp of knowing that it's going to roll out. So that alone makes this entirely different. You know, it's not a matter of is there gonna be a vaccine, will this end, but it's just a matter of when it will end. So I think it just completely changes things. We have to just remind clients that we are in a different set of circumstances than we were in the spring.

JULIE HYMAN: And Andy, I'm curious. It's Julie here. I'm curious as well what you're hearing from clients in terms-- obviously, everybody has a different investment horizon and priorities, et cetera. But in terms of capital preservation versus growth, have you seen any kind of shift over the course of the year as to what your clients are prioritizing, and do you have to sort of talk them off the ledge in some cases, so to speak?

ANDY SCHWARTZ: You know, Julie, it's a great question, because where we start all of our conversations with clients is what is your liquidity need? Because a lot of times people say, well, how should we be investing today? And the place to start is, one is how much money or liquidity do we need from these assets, say, over the next 12 to 18 months? For clients that have liquidity needs over the next 12 months, that should not be investable, because everybody also has to recognize that we are where we were before COVID started as far as the levels of the market. And I'm not saying it's too high, and I'm not making any predictions. But you have to recognize the fact that earnings aren't where they were, the economy isn't anywhere near where it was, and the market isn't at this level.

So I think, as long as clients have a long-term outlook, then the real question is over the next three to five years, do you think equities are gonna outperform fixed income? And we are more confident that that's the case. So as long as you've got an investable timeframe, then people and clients need to be thinking forward. And that's how we try to frame that.