2020 EP1124 Planning Matters - Michele Schnieder MarketGauge - Sectors To Watch

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How do you want your future to look? We want you to plan for success. Welcome to Planning Matters Radio.

And welcome into the program. This is Planning Matters Radio, rich on planning. I am Peter Rochon, founder CEO of Rochon Planning.

And with me today, I've got Michelle Schneider. She is the founding director of Market Gauge. Michelle, you pay a lot of attention to what stocks are out there, what companies are doing, and where pricing should be versus where it is. If I could get your pulse on the economy right now, I think that would benefit myself and the listeners.

Yes, I do pay quite a lot of attention and it merits a lot of attention. This whole year has been extremely interesting, as we know, starting out with the unexpected swoon of the pandemic and now having new all-time highs in the Dow with 30,000. So essentially, there has been, well, we have to understand one thing about the market.

It's very forward thinking. So you have lagging indicators and you have leading indicators. So when you hear some of the statistics come out, let's say, for example, jobs, that's actually a lagging indicator. So the market is looking more now towards what's going to happen in 2021. And we've had three major things keeping this market up, starting with after the pandemic, we had the stimulus money, and that's still on the table of what's going to happen in 2021, how much is going to get there, et cetera. Number two is we've had the vaccine.

The warp speed actually really turned out to be warp speed, with three companies at least now competing to get a vaccine out. And now finally, I think the real sort of cherry on the top this week is that Biden is now entering a transition. He's chosen Janet Yellen as a Treasury Secretary. People look at her as dovish, along with probably Powell staying on his Fed chair. The two of them together are going to keep very accommodative. And so people think the economy is just going to reopen and everything is going to be amazing in 2021.

We'll have some real growth. Yeah. With Yellen and Powell, some familiar names there for us.

So kind of the market doesn't like unexpected. They know what to expect from those two. Absolutely.

And I think the two of them actually are a formidable team. She's got the experience and he's really, I think, driven the market through. Probably one of the more volatile times that we've seen in recent years since 2008. So yeah, confidence. That's what that's what they're exuding to the market right here.

Absolutely. Well, with the election now behind us, the warp speed, they said, hey, we cannot develop a vaccine that quick. And then the election passed and all of a sudden it was it was reality. So, of course, some hope there. Now, my worries, my concerns there is that so much of the capitalization of the major market indices and so many mutual funds hold some of these tech giants. Could we see a reversal in some values there as if the vaccine is effective there? There is a change in direction and we're going back to more in-person work environment and the techs reliance that we had during the pandemic fades to some extent.

Well, I think if you just look at mankind and human nature, we need to be together. So I think you'll have a certain segment of the work population that will continue to work from home and it'll be practical for them to work from home. It's been awful convenient. It's been awful convenient. And especially I think your dogs and cats really are loving it right now.

They've always been the winners through all of this. So essentially you'll have definitely a segment that will stay home. And of course, it saves companies a lot of money in essence, too, if they don't have to pay for a brick and mortar retail office space, commercial office space. But on the other hand, I think you'll also see a tremendous percentage of people who will go back to work, who will want to be in a situation where they're sitting with other people. As I said, we like to be around other people.

That's just who we are as human beings. So how that actually plays out will be interesting. As far as the technology you're asking and big tech, that's a really great question, Peter, because I've been so carefully watching over the last couple of months, really, and talk about war of speed, on war of speed since the election, is this rotation out of the big tech and more into the small caps and some of these value stocks. And now, of course, we have energy and oil starting to catch up a little bit.

And that's really what I'm wondering, will it not continue? And a stock like Zoom, which had an incredible year, has now sold off with the idea that people will be able to move out of their homes. But there's another factor involved, and that is some of this big tech, this competition. A lot of what's happened in a lot of these companies, they have been very busy in their own level of war of speed being our theme for today, of developing technologies that will help no matter what happens with people, whether they're at home or whether they're actually out in the office. And so these newer companies that have emerged, like HubSpot, for example, or Zebra Technologies, or VIPs is another one, or Gogo, which is aeronautics, these companies have now come out to compete with the big Amazon, Apple, Netflix, Google. So I don't really see a lot of upside in those, even if we don't necessarily get back out as much as people anticipate they could. I actually see some of these more emerging or what we call these small cap growth stocks as the place to be in 2021. So tech maybe has run its course and could be out of favor as we turn into the new year?

Well, I would say not necessarily out of favor. People are always going to use Amazon to shop and people are always going to buy computers with Microsoft technology, et cetera. I just think that these giants, these behemoths don't have that much more upside. And if you're looking to be a new investor or want to increase your portfolio as we get into 2021, that's not where I would look. I would be looking, as I said, at the next Apple, the next Amazon, some of these other tech companies that have emerged over the last couple of years and particularly even over the last several months. That's kind of what we're looking at. Well, speaking of warp speed and shooting prices to the moon, Tesla I know is one that you paid a lot of attention to.

Where do you see them into 2021 and beyond? Well, Tesla is more than a company. Elon Musk is a movement. In fact, I just read he's now the second richest man behind Bill Gates. And so he's a phenomenon.

I like to call him the hand of the king, although now he seems more like the king. And Tesla has got some real fundamentals to support that. Red Bush just came out and said a thousand dollar target in Tesla because of the sales that they have throughout Europe and China.

And he's constantly trying to improve the technology, getting more and more involved with also some of the software and the batteries. Now, of course, he's looking at space. So Tesla seems to be in its own fumes, even when the market was going down during the whole swoon.

It went down, but not nearly as severe. And of course, turned out to be an incredible buy opportunity as some of the other stocks. So, yeah, I think you've got to keep your eye on Musk.

He's got his finger in everything. Him and the other guys that are now called the space barons, which is Branson and Bezos. They're all looking at space now. So I'm calling that the next frontier. And Tesla is just going to be the benefit of that, because as electric cars go, that's got the, as I said, the movement. Now, going up to a thousand dollars a share or Alphabet, Google or Amazon being so high in price, a lot of investors have a hard time finding an entry point at those prices. What do you think of these fractional shares? What do you think of these Robinhood concepts for investors to buy smaller, more affordable bite sized pieces of these companies? I think it's great.

I absolutely think it's great. One of the other unexpected results of the pandemic was that people at home, as you mentioned, Robinhood accounts, people started speculating the market. And for a while there, these individual speculators were doing far better than most of the big mutual funds and hedge funds because they were afraid to buy.

And these kids in essence had no fear. And so the fact that you can get them to participate with fractional ownership and the fact that they are now looking at the market and adding liquidity to the market, I was a commodities trader on the floor back in the day. And that is exactly what you wanted to see in commodities. You wanted to see the speculators come in and buy and add liquidity to a particular future, whether it be oil or gold or cocoa or orange juice futures. And so that's what they're in essence doing. With that said, it's also created another phenomenon, which is ride the wave, take your profits, get out, watch the dump and then get back in.

Otherwise you can really get caught in some big swings, 20% up, 20% down. So that's the one thing. They haven't quite yet figured out the strategy. Well, millennials have really changed everything and technology has really changed everything. The baby boomer generation got hired at one company. You worked a full career there. Maybe the generation before the baby boomers, the greatest generation retired from that same company and they really had a similar investment approach. Buy and hold and hold and hold forever and then utilize that same fund in retirement when you needed some liquidity.

Whereas millennials hop from job to job and they also tend to be more active traders hopping from fund to fund or stock to stock. Brilliant observation and 100% accurate. Absolutely. And I like that.

That's how my teeth were cut. On the floor in the commodity exchange, you got in, you got out, you started again. And it's really what kept you alive because commodities and everything cycles and you don't want to sit through a 50% downturn like we just saw in February and March.

Wiped out a lot of people. Michelle Schneider with Market Gauge. She is the director of trading education and research.

Any others that you particularly have your eye on for the next couple of months, Michelle? Commodities in the way of food, I think is really the way to go right now. We have, while all of this happiness is going on or what I like to call Disney World's closed, but the stock market has become the new Disney World, is that we also do have a declining dollar. We also have food prices that have gone up by 30, 31% in some cases, 35% in the last three months.

And so we're looking at a potential stagflation situation as we go into 2021. So we've bought corn. Today we're getting actually into wheat. We're already long DBA. We're long sugar.

We're long coffee. And now we're starting to look at some of the oil and some of the natural gas, which has also been made up. And we're looking to reenter the metals, but just not yet.

We're waiting a little bit longer on that. Short term, I hear a lot of people concerned that there could be more shortages on the stock or the grocery store shelves, as well as another shutdown perhaps in front of us where oil had a glut in the market and was negative in price at one point in time. Do you see that kind of thing repeating and being good for any potential buyers? Well, on top of what you just said, which is that we really do have a legitimate shortage, particularly in the way of food, mostly because a lot of the food producers stopped planting a lot of seeds because there was a glut. And so now with the demand being high and the supply being low with supply chain disruption, that is the reason why you're seeing these prices go up. And kind of the same thing happened with oil. OPEC just came out and said they're looking at a demand rise of about 25 percent into 2021. So again, all things being cyclical, these commodities have been under pressure for 40 years and now they're all starting to come to life. And then add on top of that, we have these vessels, these marine transportation sitting out there at sea, anchored, can't get into anywhere.

Panama Canal clogged up. Even Amazon is telling people, pick up your orders because the truckers may not be able to get through. They may not even be able to meet the demand. So we know simple economics, right? Supply goes down, demand goes up.

What does that create? And that's where I think rather than look at it in a negative way as a commodities trader, I look at it as an opportunity. Michelle Schneider, director of trading education and research at MarketGage, also have a new book, Plant Your Money Tree, A Guide to Growing Your Wealth. That's your newest and latest, correct? Yes. And it's a really good book to pick up because it's written in a very easy language and it really talks about a lot of stuff that you and I just talked about.

Instead though, it gives you an actual compass or a navigation system so that you can turn your way into these things with the lowest amount of risk and the highest potential for reward. So please pick it up on Amazon. Well, we appreciate your time, Michelle. Thank you for being here and joining us on Planning Matters Radio.

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