It’s a stock-pickers market: WealthWise Financial President

Loreen Gilbert, WealthWise Financial President, spoke with Yahoo Finance about the state of the U.S. economy and stock market.

Video Transcript

JEN ROGERS: Welcome back to "The Final Round." Stocks rocketing higher here today on the heels of Chair Jay Powell talking and positive vaccine-trial news out of Moderna. We have all 11 sectors higher on the day, 29 out of 30 Dow components. Only Merck actually to the downside. We have the VIX below 30.

All right, things are looking pretty good, right? I don't know. You're going to have to listen to our next guest. Bringing her in now, Loreen Gilbert. She is WealthWise Financial President. And Loreen, you say this is a bear-market rally. What do you make of the action today?

LOREEN GILBERT: Well, it was a great day in the markets most definitely, but when we look at the numbers-- let's just look at unemployment. We have more people unemployed than we have small-business owners in the United States. That's significant. So certainly in every recession when people are unemployed they look for new ways to earn money, and maybe out of this we'll get new businesses because out of every recession, great businesses are born. But I'm saying that this is a significant issue structurally in our economy, and it's going to be hard to get those unemployment numbers down.

Even as you said earlier, if 40% of those are permanent, we've still got numbers that are higher than the Great Recession. And when we look at bringing down unemployment at maybe 1%, maybe 2% per year, that's going to take a long time to work through the system.

ANDY SERWER: So Loreen given that take, then where do you come out in terms of valuation? I mean, is the market even too high right now, or do you expect it to just flatline for two years because maybe it is ahead of itself?

LOREEN GILBERT: Well, what I'd say is it's definitely a stock picker's market. I don't think it's an index market at all. And I think that every company needs to be looked at as well as every sector needs to be looked at. Today, of course, we had some of the laggards from the past rallying today. But if you just look at the airlines, once again, it's going to be a long time before those airlines are back at 100%, even 80%. So in my estimation, that rally is overreaching.

AKIKO FUJITA: Loreen, you talk about some of the sectors that you like. I see health care is on your list as well, and I'm wondering how investors should be looking at that sector. It also seems like some of the bigger names, like we saw with Moderna today, are a little more volatile, and, you know, we see the moves based on the headlines. How should investors be looking at the individual names, or is it really as simple as going after a company that really has skin in the game in terms of a treatment or a vaccine?

LOREEN GILBERT: Well, I think, you know, you can divide up health care in different parts of health care, right? So you can look at biotech. You can look at managed care. So certainly there are different aspects of health care that can be analyzed. And where we're focused are the large companies that may not be as impacted throughout this downturn. Companies that we've been looking at are United Healthcare, a large company minimally impacted by the coronavirus and has actually been doing quite well year to date.

RICK NEWMAN: Hey, Loreen, Rick Newman here. Can the Federal Reserve prop up the stock market indefinitely? Will the Fed prop up the stock market indefinitely, and should the Fed prop up the stock market indefinitely?

LOREEN GILBERT: It's a great question. I love it because we do have a market that is based on the Fed. Everything about this market is based on what the Fed says. Every moment that Powell speaks is analyzed, and what we see are rallies over the weekend after we saw a better picture than his earlier speech last Wednesday. So definitely the intervention that's going on that's unprecedented into the markets.

So I would like us to get back to what I would call a truly free-market economy. But right now under emergency measures, I think that the Fed has to do what they're doing. Saying-- for the Fed to say they'll do whatever it takes is what's sustaining this market right now. So certainly longer term we have to get away from that. Right now, we're in that emergency measure.

JEN ROGERS: So if we are in a bear-market rally, how long do you think this lasts? I mean, what are you telling clients right now, like to sit on the sidelines and wait, but for how long?

LOREEN GILBERT: Well, I'm not saying-- you know, I do think it's dangerous to have too much cash. You want to have enough cash to get through the emergency personally, but you want to make sure you're putting your cash to work. So we're going in cautiously. Every time we have big pullbacks in the market is when we do new entries with cash. So that's what I would say.

So I'm not advocating completely sitting on the sidelines, but I'm saying be cautious as you're entering in, and then make sure you're going to be in it for the long haul to get through this year and next year.

Certainly I believe what Powell said. Don't bet against the US economy over the long term. We're innovative. We've always come out of it. We'll come out of this as well. I'm just saying I think I want investors to also be prepared for a volatile market, ups and downs, and just hold on and get ready for a long haul.

JEN ROGERS: All right, I'm holding on. Loreen Gilbert, WealthWise Financial president, great to get a chance to talk with you.

LOREEN GILBERT: Thank you so much.