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Stocks drift after S&P 500's record close; Target, Lowe's post blowout earnings

Yahoo Finance’s Alexis Christoforous and Brian Sozzi discuss what’s happening in the markets today with Winnie Sun of Sun Group Wealth Partners.

Video Transcript

WINNIE SUN: Many of our clients are actually pretty excited that we're going into the election. Certainly, we're all eyes. Many of my clients have been watching the Democratic National Convention very closely. And although there's been a lot of talks and concerns about what that will translate to in terms of their bottom line, in terms of taxes, still, I think the election is something that's on everybody's mind right now.

ALEXIS CHRISTOFOROUS: Winnie, how is that informing their investment decisions? Are they moving things around in their portfolio right now? Are they holding on to some cash? A lot of people are saying this might be the most litigious election we've ever had, especially with President Trump criticizing mail-in ballots, saying that they're fraudulent. We may not very well have a definitive winner the evening of November 3. So what are your clients doing ahead of that?

WINNIE SUN: So our clients are certainly very, very realistic, that we anticipate there to be more volatility, whether that's going to be sooner rather than later. But what you said is exactly right. We are certainly looking to take more money off the table right now. We are certainly taking profits.

A lot of our tech-- are our clients are in television industry, movie industry, technology. And those, especially technology, we've seen their-- not only their personal investments do well, but their company stock has done well. And so we are definitely actively taking some profit, keeping some cash along the sides.

But interesting enough, a lot of our clients are also balancing out with commodities, right? So you see continued interest in things like gold. So we continue to be very cautious. However, I think the key thing that we're doing right now is looking to put more money into tax-sheltered investing rather than fully taxable, because, like everybody knows, taxes are going to be going higher.

ALEXIS CHRISTOFOROUS: When you say that you're taking some money off the table, what areas are your clients pulling some of their investments?

WINNIE SUN: We're certainly taking some money off the table off of growth. A lot of large-cap growth names have done very, very well. And they continue to do well. It's not to say that we're exiting out of the positions completely.

But we are certainly doing haircuts across the board. And we're holding more cash for opportunities, because we do suspect that after the election, depending on the result, we anticipate there to be volatility, whether that's going to be positive volatility or negative volatility. We would rather be more cautious and we'd rather realize some of the gains that we already have.

BRIAN SOZZI: Winnie, when you say taking money off the table, is that a an indication of a lack of confidence in both candidates? If President Trump gets re-elected, you see more chaos, potentially. You do see some-- potentially some higher taxes under him to pay off all the debt that he has incured under his past four years. If you get Joe Biden, he's already said we're going to raise corporate taxes. Maybe not a good situation either way you go for stocks.

WINNIE SUN: Absolutely. I think, Brian, here in California, it's already been reported that our highest tax bracket is going to be increased by more than 10%. And a lot of my clients, unfortunately, fall into that category-- well, fortunately, but unfortunately in both ways. But that being said, we do know that taxes are going to be going higher. So why not take some profit off the stock that they currently own, or mutual funds or ETFs that they currently own, and reposition that into-- such as traditional IRA or converting that?

We're even doing some conversions, moving money from a traditional IRA to a Roth, taking the tax, paying the tax now, adding to their kids' college savings plan. Any way that we can move into a tax shelter environment right now, that is our primary concern and interest right now.

ALEXIS CHRISTOFOROUS: Winnie, what about commodities? I mean, you talked about putting money into gold. A lot of people think that gold-- that that ship has sailed already, that there are overvalued assets there. What are you doing specifically in the gold space?

WINNIE SUN: Well, in the gold space, for some of our clients, I mean, it's always a good idea to have about 5% of their portfolio in commodities to just overall balance what they invest in their other sectors. So what we are doing is once again reallocating, making sure that we're no-- we're not too heavily invested in such as large-cap growth, so tech names, mid-cap. A lot of the tech names in our portfolio have done so well that we just need to rebalance a little bit.

It's not to say that we're taking a-- overweighting in commodities. I think it's just important to have that position. But more than that, it's really just rebalancing and making sure that they're aligned. Because a lot of the names have become unaligned.

BRIAN SOZZI: Winnie, when you talk to clients right now, the market-- listen, it just hit another record high this week, incredible run. Do you get the sense of enthusiasm when you talk to them? Are they foaming at the mouth like 1999 to get into the market if they're not in it, or if they are in the market, to buy more stocks?

WINNIE SUN: I don't think so. I think overall, our clients are concerned. They feel very grateful. And they feel very fortunate and lucky that their portfolios look the way they do, that they look like pre-pandemic levels. But they consider themselves very fortunate.

And when we talk about the importance of taking profit and just gearing on the side of caution, that's very well received. And that's something that we yet to have any client feel that things are just going to continue to be very, very good. They almost feel like wow, we got there. What should we do now? They don't feel like they can just continue to and sit there and hope that it gets better.

BRIAN SOZZI: Well, I'm glad they're not-- they're not foaming at the mouth. You have to stay disciplined in investing, as you know all too well. Let's leave it there. Winnie Sun, managing director of Sun Group Wealth Partners, always good to speak with you.