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'Today is a relief rally more than anything': JAG Capital's Norm Conley on market reaction to the election

Norm Conley, CEO and CIO at JAG Capital Management, joined Yahoo Finance Live to discuss today's market action as stocks react to incoming election results and his outlook for the market heading into next year.

Video Transcript

SEANA SMITH: For more on this, we want to bring in Norm Conley. He's the CEO of JAG Capital Management joining us by phone. And Norm, it's interesting when you take a look at the market's reaction today because we still don't have a clear winner in the presidential election. Senate races remain up for grabs. When you look at the rally today, is there any chance, do you think, that we're getting a little ahead of ourselves?

NORM CONLEY: Well, first of all, never a dull moment, huh? I think like a lot of folks, I was up for most of night watching this. And here we are with no resolution, no clear resolution to the presidential side, and the Senate is still up in the air, as you mentioned. You know, when you look at what's happened in the market over the last couple of months, I think today is really a relief rally more than anything. You know, whatever the outcome of the election is, at least it's over.

You know, the actual election is over. And if you look at what the broader market did, really, from early September into late October, I mean, the S&P before today, obviously, was down as much as 10%. So I think this is resolution. We've got the election behind us. And the markets are maybe breathing a little sigh of relief.

ADAM SHAPIRO: Norm, I don't envy you having to manage money in an environment where, you know, one of the examples you talk about because of COVID-19 is auto plants experiencing supply shortages because of forced lockdowns in some places. So depending on who the winner is, and with COVID cases spiking in this country, how do you position your clients for what could be coming down the pike?

NORM CONLEY: Yeah, it really has been a fascinating and, in a lot of ways, as a portfolio manager, educational and frustrating-- let's put it that way-- type of year. I think, you know, the winds seem to be blowing in Biden's direction here. And assuming that comes to fruition, I think we can expect a Biden administration to perhaps take a different, more strict approach related to containing and ending the COVID pandemic. And if that's the case, you could see a continuation into 2021 of some of the things that actually have worked pretty well this year-- you know, technology stocks and leading the charge with some communication services participation also.

SEANA SMITH: Norm, I want to ask you about the VIX because right now, it's right around 29. And I think a lot of the talk going into this, at least leading up to the election was the odds of a contested result. When you take a look at the VIX, the fact that it's fallen back to 29, are the odds-- is the market not buying a drawn-out contested result at this point?

NORM CONLEY: You know, I think this is what I think. I think the market is keen as much off of what appears to be the path of the Senate as it is the actual ultimate winner of the presidential election. And you know, if you look through that a little bit, the GOP maintaining control of the Senate, the house staying the same, obviously, in Democratic control, and a Democratic president-- you know, as citizens, we tend to like when our government is able to take action. But markets don't. Markets actually prefer stability, which is often characterized as gridlock in Congress. So I think that's what's happening. I think that could be a small part of why the markets are acting so ebullient today.

SEANA SMITH: All right, Norm, it's great to have you on the show. Norm Conley, CEO of JAG Capital Management, thanks for calling in.