WealthWise Financial CEO Loreen Gilbert joins The FInal Round panel to discuss what she predicts will push markets in the future and why investors should weather the volatile market storm.
SEANA SMITH: We want to bring in Loreen Gilbert, WealthWise Financial CEO. And Loreen, let's just start with where Jared ended that, just in terms of what is priced into the market ahead of the election. Is a blue wave priced in? What do you think?
LOREEN GILBERT: I think that investors should beware of any energy trade right now while we still have uncertainty in the markets and where this election will end up. There will be clear winners and losers. And we'll have a better picture after the election. But right now, it's too early to tell. So I would stay away from that trade.
SEANA SMITH: So Loreen, what are you telling your-- what are you advising your clients to do at this time?
LOREEN GILBERT: We're advising investors to stay the course and to keep a diversified portfolio. I think there's more risk to be out of the market than risk to be in the market. As was just stated, you know, we haven't seen huge shifts right now in the market. And I think if we do, it will probably be-- if there is a contested election, we might see some volatility there.
But nonetheless, we will have a winner. This is a known unknown. We know that we will have a president of the United States and a vice president of the United States. So we know that. So while there is uncertainty, we will see the way clear afterwards. And the markets are still robust. So I would say being in the markets is the right move.
RICK NEWMAN: Hey, Loreen, Rick Newman here. So when we do know the outcome of the election and we don't have to talk about what might happen every minute of every day, what is going to be the next thing that starts driving the market?
LOREEN GILBERT: Well, we still don't have a vaccine. And that is a driver for sure. So we've seen a therapeutic with Remdesivir being approved. That's positive. That's clearing the way now for a full vaccine. And then, of course, that has to be distributed. But that will be an impetus and a catalyst for the markets, as well as we expect to see more stimulus.
And while we haven't seen it prior to the election, I wouldn't write it off. At this point, it's a matter of the fine details that are being worked on. And while no one wants to say there will be one before the election is finalized, it probably would be soon afterwards.
SEANA SMITH: Loreen, another big driver of the markets right now is third quarter earnings season. We're seeing that reflected in the broader markets today, with Intel and American Express down pretty substantially, especially Intel, when you see shares off just over 10%.
I'm curious just what your take is on third quarter earnings season. Because we've seen a number of companies, over 80% of companies, beating expectations and beating by a pretty wide margin. Of course, these expectations have been significantly lowered here and are, of course, lower on a year over year basis.
But do you think, from what we've seen so far, that it confirms what we have seen in the market over the last several months, just in terms of a lot of these big tech names outperforming and really piecing this recovery?
LOREEN GILBERT: Yeah, I think we're going to start to see a shift. You know, I think that we're seeing these companies I do want to comment on the American Express comments that they came out with. They put $665 million as a set aside for defaults.
And so I think we're going to continue to hear that from the financial institutions. I think those are large numbers. That's what attributed to their decline in profitability. And if that number does end up being lower than that $665 million, then I think it's going to go right to the bottom line. So that's one of the reasons we like some of these financials, is that they're pricing in some significant defaults that may not happen.
And back to my point about a shift in the market, I think we're going to start seeing this shift away from these mega cap tech companies, moving towards some of your smaller companies. And as we look at what the analysts are expecting for profitability next year, I think we're going to see small caps outperform.
SEANA SMITH: Yeah, loreen, it's interesting. I was going through your notes, and you said something that stuck out to me. You were talking about the language in these recent earnings calls from the tech executives that we've heard from so far, talking about competition and saying that competition is pretty fierce at this point.
And because of that, you expect to see this more pronounced losers in this category going forward. Can you share some of those names or some of the companies that you think could potentially face pretty significant challenges, at least in the short term?
LOREEN GILBERT: Right, well, I think, like you said, competition is an issue. But another issue is antitrust. And no matter who's elected, this is a significant issue for these large tech companies. And it's going to impact profitability, if, you know, there's this tug of war between consumerism and what's good for consumers, and what's good for business and profitability. And with that, I think that's an area that investors are not seeing the risks.
SEANA SMITH: That's interesting. So you don't think a lot of these antitrust concerns or the potential crackdown on regulations, that they're not already priced into some of these big tech names.
LOREEN GILBERT: No, I don't think so. When you look at how much Google is paying Apple, when you look at these numbers that we see, they're significant. I don't think they're priced into their stock prices.
SEANA SMITH: All right, Loreen Gilbert, WealthWise Financial CEO, always great to have you on the program. Have a good weekend.
LOREEN GILBERT: Thank you so much.