Yahoo Finance’s Alexis Christoforous and Brian Sozzi discuss down today’s market action with MV Financial Investment Strategist, Arian Vojdani.
BRIAN SOZZI: It's been a crazy week, really just a crazy week through and through. What's your latest thinking on the market?
ARIAN VOJDANI: I think the market is going to continue to be volatile. You're right, Brian, it's been a crazy week. How much has happened in one week alone, two weeks alone here. I think the market is focused on a couple of things. Obviously, stimulus is very important here. So I think that's going to at some point really factor in in a big way. I think the election continues to be on investors' minds. But I think again, like I said before, the Fed has put a lot of liquidity into the market. And I think there's nowhere else for money to go at this point. So I think we remain cautiously optimistic about the overall direction in the markets, at least intermediate and long term.
ALEXIS CHRISTOFOROUS: Arian, where are you putting most of your money to work at the moment? Is it in US equities? Is it in large cap versus midsize and small companies?
ARIAN VOJDANI: We are mostly extended into large US equities. I think we've become very shy and really hedged against smaller US and international emerging markets. We think there continue to be problems abroad. And the current climate is going to be difficult for a lot of these companies to weather out, especially with the continued uncertainty. COVID is not a six-month period. We're looking until late next year before we even start to return, or at least they tell us we start to return to some type of normalcy.
So we think that these companies, the ones that really have not shown being the kind of cornerstone type companies throughout different types of market cycles, especially challenging market cycles, are going to be challenged. And that's why we really look to large US. And then obviously, fixed income. That remains very unattractive at this point, given this type of market. So we're really looking at keeping that short and really just as a principal preservation play.
BRIAN SOZZI: All right, for those investors who have just had simply had enough of all this volatility, they're absolutely losing their minds, where could they go to hide out for some relative safety? Don't say cash. I'm hoping there's other places that you guys are talking about right now.
ARIAN VOJDANI: Yeah, that's, you put out a tough one, Brian, because really, it's a tough market to hide out from volatility. We have a lot of clients that are worried and call us with this question all the time. It's something that I talk to them about almost on a daily basis. And really, this is one of those things, we talk about September, October being tough months and people get kind of queasy with the volatility, especially today, given everything that's going on.
And you have to trust in your strategy. It's not time to make knee jerk reactions to try to move everything to cash. Like I said, fixed income is not giving you an edge right now. I really think that you need to really look longer term, not worry about the volatility today. Elections play out in the market. If you're worried about the election, if you're worried about other factors, these things typically play out a shorthand in the market.
Obviously, depending on the direction of the larger economic picture based on policy and based on COVID, that presents challenges. But you have to think, you're an investor, not a trader, two, three years, five years from today, what do you think the picture looks like. And I'm sure it'll look better today, and companies will be looking stronger than they look like today.
ALEXIS CHRISTOFOROUS: What are you expecting from this earnings season that's quickly going to be upon us? And have you made any moves, changes to the portfolio ahead of our earnings reports?
ARIAN VOJDANI: We haven't really made many changes in our allocation based on what we think earnings are going to look like. I think it's going to be a mixed bag. I think the market is really dominated right now by a short name of companies. I think you're going to continue to see that trend play out. I think we talk about Q4 being a strong quarter, so we have to look ahead to Q4 Obviously, this year looks very different than years past. But I still think we're going to see a bump here in Q4. Jitters due to November I think, but we're not really changing anything at the moment.
Like I said, we're really positioned down. We're at a lower risk spectrum of our portfolios looking at large US, and we're looking for opportunities to bite into the market. So if any of these companies, any of these sectors in the market generally give us a at attractive price point to buy in, we are ready to do that. We have cash on the side, we have short-term fixed income, like I mentioned, so that we can start to extend back into the market.
BRIAN SOZZI: Let's say we do have investors out there watching that are inclined to look longer term, three to five years out. Five years from today, let's say we do have a Joe Biden presidency. How should they position their portfolios today for that?
ARIAN VOJDANI: Great question. I think people really think there's a Titanic shift every time administration comes in. I mean, look at 2016, if you look back to the way people started to buy three sectors of the market, the Trump trade, thinking that things were really going to change. The market looks generally the same. The trends look overall the same. There's little changes.
But you really should be looking at companies that have strong fundamentals, parts of the market that are doing better. Tech is not going to change anytime from today to two three years from now, five years from now. Obviously, if there is a Biden administration, you might see infrastructure actually start to take place. And infrastructure trade could make sense.
But we're not really going to say the fundamental picture changes so much from today market-wise and which kind of companies you want to be in today versus five years from today. You may have to do some different tax planning, but listen, that is not something that we can plan on today. You have to wait and actually get the data before you make any type of calculated changes.