Hennion & Walsh CIO Kevin Mahn joins Yahoo Finance Live to discuss the stock market amid heightened market volatility in recent days.
- Want to get right to our market guest, Kevin Mahn, from Hennion & Walsh, CIO. Thank you so much for joining us, sir. What do you make about the President's remarks? Did it go far enough? Markets obviously liking what he had to say.
KEVIN MAHN: Yes. And of course I'm not a doctor, I'm a portfolio manager. But it's my understanding that this particular strain of COVID, while it may be more contagious, its symptoms are less severe. And I think that echoed through into some of the comments from President Biden today and how they're focusing on combating this new variant at this point in time.
And investors greeted that very positively, as they don't feel at this point in time that this new strain is going to slow down the economic recovery that has taken place since the initial stages of COVID-19, when they put all the mandates in place at that time to limit the spread of the virus. So investors greeted that warmly. And I do see more upside potential for stocks for the balance of this year as a result.
- Well you know, Kevin, the market has been so volatile, seeming to move on any pandemic headline that we get. Should the markets stop doing that? In essence, you know, like not listening to every pandemic headline and then trading on it, since it is still a very liquid situation.
KEVIN MAHN: Absolutely. And each time we get that new bout of volatility, it does create attractive entry points for certain areas of the market, such as technology, notably, Alexis, those revolutionary areas of technology that benefited so much during the shutdown period of COVID-19.
But overall I think investors need to take a longer term perspective and recognize that the economy continues to recover. And in all likelihood, interest rates will remain lower for longer, although we are now in a rising rate environment, where the Fed is likely to pick up the pace of tapering. But that, in addition to more potential stimulus from the federal government, is generally good for stocks.
So maintain true to your actual risk tolerance, what your goals and objectives are, what your investment time frame is, and build an asset allocation strategy that's going to help you meet your goals, recognizing if you are or are not comfortable with market volatility, because it's not going away, Alexis.
- And sir, in my mind, there are four real things that are concerning investors right now. It's the variant. Its inflation. Its supply chain. And then there's also this question, if some of the liquidity that's been in the markets is now getting taken off the table. In your mind, which is the biggest concern right now?
KEVIN MAHN: I really think the biggest concern right now, outside of how the government may or may not respond in a couple of weeks to what we learn about this particular variant, is labor supply shortages. Because those labor supply shortages are impacting supply chain. Those supply chain issues are potentially leading to heightened and continued levels of inflation. So they feed off of each other.
But at its core, it all goes back to those labor supply shortage issues that are impacting the ability to get all the goods that we produce to their ultimate end destination and into retail consumers' hands. With that being said, despite all of those supply chain issues, we're anticipating another record holiday shopping season, with a primary benefactor being e-commerce.
And we continue to believe that e-commerce isn't just a passing fad, but in all likelihood, as the statistics suggest, in two years, one in every four retail purchases will be made online. And we see investment opportunities in those companies that stand to benefit from that continued growth in e-commerce.
- Kevin, when you look ahead to 2022, which is just a few weeks away--
KEVIN MAHN: Yep, I can't believe it.
- Do you think that leadership-- I know I can't believe it either. It all just seems like a blur, you know.
KEVIN MAHN: I have to start shopping myself.
- But I'm wondering where you see leadership is. Are we going to see a material change and who's going to lead this market higher, if you believe that we're going to be higher in 2022?
KEVIN MAHN: Yeah, I don't think we'll be as high as we were in 2021, but clearly I see more upside potential in 2022. In terms of what sectors are going to provide leadership, I think it will continue to be those three particular areas that have a variety of leadership since March of 2020, those being technology, notably those smaller cap technology names in the areas of artificial intelligence, cybersecurity, robotics.
I think about e-commerce, not just the e-tailers, but also the other companies that stand to benefit from the growth of e-commerce, the credit card companies, the industrial reads. And then finally at its core, biotechnology. Unfortunately, even beyond this new variant of COVID-19, there are likely to be more viruses. And there are many other rare chronic diseases that we still don't have treatments or cures for.
As a result, that innovation comes from biotech companies to provide those solutions, and we think that's another area of leadership. So biotechnology, technology, and e-commerce, we believe will provide the leadership throughout 2022 and beyond.
- All right, Kevin Mahn, we are out of time. Hennion & Walsh CIO, thank you so much for you perspective today and being with us.