‘This is one of the most resilient markets in history:' KeyAdvisors Group

Yahoo Finance’s Alexis Christoforous and Eddie Ghabour of KeyAdvisors Group discuss market action after the S&P 500 closed at a record high yesterday.

Video Transcript

ALEXIS CHRISTOPHOROUS: I want to bring in, now, Eddie Ghabour. He is managing partner at KeyAdvisors Group, also author of "Common Sense Bull." Eddie, good to have you here on the show. Look, for the first time in nearly three years, yesterday, we had the Dow, the S&P 500, and the Russell 2000 small cap index all close at record highs. What does that tell you about the strength of this market rally and the breadth of this market rally?

EDDIE GHABOUR: Look, this is one of the most resilient markets, probably, in history, when you take a look at the obstacles ahead of us here in the near term, the spikes in the virus. But look, I think the bottom line is what this market is telling us and the signals that it's telling us is the market is forward-looking. And looking out to the next six to 12 months, the backdrop is extremely bullish, especially with this vaccine news. This vaccine news and how effective this vaccine has tested is a game changer. It really is.

And I think people are now starting to see the light at the end of the tunnel that, hopefully, this third wave we're going through right now will be the last of it. And everything moving forward, starting next year, should start heading into a positive territory. So we are extremely bullish going into the next 12 months in regards to equities due to that backdrop that we have heading in to the new year.

ALEXIS CHRISTOPHOROUS: Well, let me throw in a crux here, which is stimulus. Does the fact that we might have a vaccine ready to be distributed a little sooner than, maybe, we thought mean that the government doesn't give us the stimulus, or as big a stimulus package, as we were hoping for?

EDDIE GHABOUR: Well, I think with a split government, the market has already priced the fact in that the stimulus bill is not going to be nearly as big as initially thought out to be. So we are going to get a smaller stimulus, in our opinion. But again, I think having the vaccine is a-- is a good thing. So that far outweighs needing a massive stimulus bill.

We do need stimulus, make no mistake about it. And I wish our politicians would move sooner on a targeted stimulus plan. Because states are starting to shut down again to a certain degree. My state just announced further shutdowns today. And so stimulus is definitely needed. So that is a near-term risk and will cause some volatility. But again, I think dips are to be bought right here, is my opinion, if you have the right risk tolerance.

ALEXIS CHRISTOPHOROUS: All right, what state are you in by the way, Eddie?

EDDIE GHABOUR: I'm in Delaware.

ALEXIS CHRISTOPHOROUS: Oh, OK. Yeah-- yeah, I know, we're seeing different pockets of the country going into these new-- new restrictions. And we have to think about what kind of impact that's going to have on the economy. So as you look at that backdrop, where are the opportunities. When you say buy on the dip, you know, where do you see those opportunities for investors, with this kind of a backdrop, with more and more local communities going into lockdown?

EDDIE GHABOUR: Well, we have been advocating a barbell approach of rotating out of some of your technology companies that really were the big winners this year and actually going into the value sector. You know, the value index is still down for the most part. There's lots of areas that we feel like are going to do the best next year, as we call them, the recovery plays, you know? So you can look at your value stocks that have really underperformed growth for a long period of time. And we feel like that's going to be the real winner heading in 2021.

ALEXIS CHRISTOPHOROUS: All right, we are going to have to leave it there. Eddie Ghabour, thanks so much for joining us.

EDDIE GHABOUR: Thank you.