'The $600 stimulus is weak from an individual standpoint': Financial Advisor

Brian Walsh, Jr., Senior Financial Advisor at Walsh & Nicholson Financial Group, joins Yahoo Finance's Melody Hahm to break down the latest market action, as stocks rise in wake of President Trump signing the stimulus bill.

Video Transcript

MELODY HAHM: Of course, Jared sort of alluded to a less drama-filled year as we look to 2021. Will that be the case as we look at equities? Let's bring in Brian Walsh, Jr., Senior Financial Advisor at Walsh & Nicholson Financial Group, joining us today. Thanks for hopping on during a busy holiday week. We really appreciate it.

BRIAN WALSH, JR.: Great to be here, Melody. Thanks.

MELODY HAHM: So when you think about last night's surprise stimulus approval, what were your initial reactions? Are you at all surprised by the juicing up of the markets today as we enter the last trading week of the year?

BRIAN WALSH, JR.: No, I'm not. The stimulus package, even though Trump had a little bit of posturing there, we expected this to go through. The news of it going through is not new news to anybody who was looking at the equity markets on a long-term basis. So the $600 stimulus, though, is weak from an individual standpoint. What that's actually going to do for people who are in need is yet to be seen. But the package itself is robust. It is helping small businesses. We'll see how it fares.

MELODY HAHM: Of course, we're eight days out from election day, again, right, in Georgia's crucial Senate runoff races. We know the Democratic candidates there have actually sounded the alarm quite angstily, right, about there ability to actually keep pace with GOP spending. You're predicting that it will stay a divided Congress. Are you still sticking to that forecast? And what do you think it means for 2021 equities here?

BRIAN WALSH, JR.: Yeah, we do believe it will be divided Congress, which will be status quo from a regulation standpoint from new policies being implemented. But the backdrop of the equity markets really has to do with the Fed-- low rates, very supportive backdrop, more fiscal stimulus.

So the divided government is just more of a tailwind. However, having said that, there are pockets of opportunities if we do see a blue wave, and we do see those Senate seats flip blue. And there's always opportunity in markets. And what you'll see is a reshuffling of the deck of where we expect and see long-term returns coming from if we do have that pass.

MELODY HAHM: And then, of course, we have seen easy money flowing through. The Fed has been-- alludes to the fact that they will continue to [AUDIO OUT] as we enter this recovery period. Do you anticipate there could be, perhaps, a drastic move from the Fed that we can see, perhaps, in the second half of 2021? Or should investors be bracing for, perhaps, this recovery to happen more quickly than we originally anticipated?

BRIAN WALSH, JR.: So what I think investors need to look at, especially those who are really in retirement or close to retirement, is what we focus on at Walsh & Nicholson, and that's really a three-pronged approach to portfolio management. And if we do have low rates, continue to have low rates, the Fed does maintain easy policy, then for clients who need income, we need to keep them in short-term instruments for a year. So a year of cash on hand-- that's going to allow clients to navigate the markets long-term.

And we don't believe that the Fed is going to raise rates anytime soon. They've mentioned they weren't going to do that until they start seeing higher inflation on an average of 2%. So they're going to let it run. So the risks there are in the long-term side of portfolio management. And that's where we are going to look into tips, gold, and certain areas of the market that are going to benefit when rates do begin to rise. But in the near term, we don't see that being an issue in the markets.

MELODY HAHM: And looking at the sectors that you are favoring right now, industrials, you mention because there is potential, of course, for an infrastructure bill under the Biden administration. We have heard infrastructure week, I think, at least five times during the Trump administration. How bullish are you on the fact that this may actually come to fruition, and this will be a serious effort actually initiated over the next four years?

BRIAN WALSH, JR.: Yeah, I think it's going to be a great place to be moving forward. I think you have bipartisan support for an infrastructure bill. I think you're going to have a push by Biden and his administration to get it done. Within that, we're going to see a wave of tech within industrials.

Some of these new infrastructure projects are going to require a lot of technology, specifically in the semiconductor space with chips to be able to fuel some of these new projects. So technology, specifically semiconductors and industrials, we see as a positive return catalyst for the equity markets, regardless of who's in office, but specifically, if Biden does put these policies in place.

MELODY HAHM: That's some optimism there. Thank you so much, Brian Walsh, Senior Financial Advisor at Walsh & Nicholson Financial Group. Have a great weekend.

BRIAN WALSH, JR.: Thanks.