Why this Managing Director is picking defensive stocks

Sandi Bragar, Partner and Managing Director at Aspiriant, joins The Final Round to discuss the Federal Reserves' latest moves to up liquidity and her concerns about U.S. debt numbers.

Video Transcript

SEANA SMITH: When you take a look at the action today, the Dow was off 762 points at the low. We also had the Fed this afternoon, which is part of the reason why we saw, like, higher this afternoon. The Fed saying it's going to start buying these individual corporate bonds. How do you-- I guess what is your take on this news? And also, what do you make of the recent action when you couple today's performance with the massive sell-off that we saw at the end of last week?

SANDI BRAGAR: Yeah, it's been an incredible day, incredible week, and incredible year for sure. And someone who once described the stock market and the economy as being parallel to a dog walker and a dog related by a leash. And it certainly seems like the leash has really gotten extended out. And the Fed might have unleashed the dog today.

We have concerns. We're worried. We think that the market has gotten way too ahead of itself. So we've been very defensive. And in the portfolios we're building for our clients who are corporate executives and family businesses and entrepreneurs, we're being cautious.

We have fixed income in there to help bolster against the stock equity. And we've added some gold starting last summer. That's been a great trade for us, especially now that the opportunity cost on that is zero. And when it comes to stocks, we're still invested. But we're being very picking and choosing about what we're putting in portfolios.

SEANA SMITH: Sandi, when you're deciding what to put in portfolios-- you're being picky and choosy-- what are some of the things that you're looking for? You're favoring certain sectors? And what do you think is what, I guess-- what catalyst are you looking for in order to maintain this momentum that we're seeing?

SANDI BRAGAR: Yeah, so Seana, we're managers and managers. And we're looking for managers oftentimes active in this environment. We think active managers will find their way in the sun. And in the stock market, we have our eyes on quality stocks, so really strong companies with a lot of cash. They can self-fund operations. They have little or no debt. And they're selling their goods and services during poor economic times and good economic times.

So I think companies, like Procter & Gamble, Johnson & Johnson, Apple, Microsoft-- we like those a lot. Also, value stocks, we think, have a lot of run in them over the long term. So we've been really tilting toward value within the managers we're choosing.

ANDY SERWER: Sandi, you seem like a nice, normal person. And I'm just wondering, like, gold-- really?

SANDI BRAGAR: Yeah.

ANDY SERWER: I mean, come on, because that's usually like-- that's usually different kinds of people than you. Let's just leave it at that.

SANDI BRAGAR: Well, typically, it has been. But as the market valuations have gotten really high, just like putting a little bit of salt and pepper in a salad and a little bit of gold in a portfolio helps a lot. It's been up about 30% over the last year-- 13% this year-- so it's been a help.

AKIKO FUJITA: Sandi, when you say you're worried, I mean, is the concern here about the Fed's message in this reliance increasingly or looks like it that investors are going to see that the Fed has its back? Essentially regardless of what happens with markets, they're going to continue to fuel it. Or is it that just the scope or the scale of the Fed's moves have skewed the market one way or the other?

SANDI BRAGAR: Yeah, so Akiko, we're concerned that just the economy is on such-- it's just-- it's struggling, right? So many people out of jobs. Those who are working aren't spending a lot of money. The way we're using time and space is so different than before the pandemic. We just were really concerned about a long and slow recovery.

And also, you know, it's great that the Fed is propping up the market, creating a lot of liquidity that helps in the near term. But there there's a mounting amount of debt. And we're really concerned about that over the long-term.