Markets have ‘seen crazier’ times, Bone Fide Wealth president says

Bone Fide Wealth President Douglas Boneparth joins Yahoo Finance Live to discuss the state of the stock market as investors eye sanctions on Russia and how younger investors are approaching market volatility.

Video Transcript

- Let's turn our attention back to the market action now because we have seen a bit of a picture here emerge with the Dow down about two-- more than 200 points, but the NASDAQ clawing back into positive territory. Let's bring in Douglas Boneparth, he's Bone Fide Wealth president.

Douglas, we've seen kind of these swings happen in the lead up to this invasion. I mean, I'm curious, first of all, what you see in terms of the market moves so far. The Dow coming-- I mean, having the losses here. We're talking about-- it was down more than 400 points earlier, down about 200 here. But the NASDAQ now in positive territory. What's driving the moves there you think?

DOUGLAS BONEPARTH: Yeah, I think over the last two years, nothing should surprise you anymore. It's been wild to see dramatic, if not historical swings out of major economic and now, geopolitical events taking place.

I think on the technology side, there's probably some sentiment that things have been oversold and re-examine whether or not being in a bear market for tech is something or a place that we should be.

I'm not surprised by the broader US indices struggling to turn positive. It's really hard to make an argument that on two fronts here, one what's happening with Russia and Ukraine, and what we need to deal with our own economy domestic-- domestically in terms of rising rates and inflation pressure.

But it is quite amazing to see what we had on Friday turn green. And look, you know, again, if we finish the day positive on the S&P or the Dow, it's kind of at a point where it should be surprising, right, but we've seen crazier. That's the state of play right now for the markets. It's really a guessing game. And up is down and down is up half the time.

- Yeah, I think that pretty much speaks to what we've seen so far this year, which is that yes, we've seen a huge swing here, but we've seen worse. When we talk about where things stand right now in terms of the equity space, what are you advising your clients?

Are you-- are you saying more clients should be moving, sort of holding cash, just staying on the sidelines here to ride out at least, the geopolitical volatility? Is this an opportunity to get in? How are you or are you thinking in terms of strategy?

DOUGLAS BONEPARTH: Sure, so I know that the most important thing for my client to do is stick to their long term strategy. I have the good fortune of dealing with primarily younger clientele, between the late 20s to early 40s, where a lot of the money is long term money so they can withstand volatility.

This isn't the first time that they've had to go into markets that go up and down pretty dramatically. And I would spend more time focusing on when the opportunities are to put fresh dollars to work, whether there are dramatic drawdowns. If you look to technology, there's been significant drawdowns across the board to the tune of 80% and 90% with some companies.

But again, the broader index down 20%. And even when you look to large cap US stocks, you see that 10% correction where there are opportunities to nibble here as well. I would prefer not to see more dramatic drawdowns. But when we do, that's the opportunity to work with clients on figuring out a strategic way to enter the market, whether that's by reducing longer-term dollar cost average strategies.

So if they're averaging in over 12 months, maybe to shorten that to six or less. We can talk about taking their long term allocations, and whether or not it makes sense to become more risk on. So taking a aggressive 80:20 investor and bringing them to 90-10 or 100% equities.

Again, I don't know if right now is the time to be shortening these strategies or putting significantly more dollars to work as it is to just kind of see when greater opportunities present themselves. But those are the conversations happening with clients.

Again, the most important thing is to stick to your strategy. We know that. Investors who are disciplined and stick to their strategies are the ones that more likely win in the end. So panic selling doesn't exist here. We don't want that to exist. And we do look for opportunities if things become more dramatically cheaper in terms of equity prices.

- What about exposure to crypto? I mean, you mentioned you work with a lot of younger investors as well. We're seeing it kind of diverge from equities today, with Bitcoin back above that $40,000 handle. There seems to be two schools of thought here. On the one hand, you've got those calls for crypto exchanges to ban Russian users, and then others are saying that well, this could be an opportunity for crypto, at a time really to evade sanctions.

DOUGLAS BONEPARTH: Yeah, so I'm a big proponent of crypto. My practice deals with a lot of clients and prospects coming in with questions around this. If not having exposure, I would argue 50, maybe a little bit more percent of the practice has some kind of exposure without us even bringing it up from an educational standpoint.

The crypto narrative is it's very intriguing. At first, digital assets sold off in tandem with equities. Once again, showing that investors-- it's not as uncorrelated to riskier assets equities as it's made out to be. But as they say, we're still early and I think it's early into the indoctrination of crypto assets, you're more developed assets like Bitcoin and Ethereum, for example.

So you know, what we're seeing today interestingly enough, and really just the last few hours is that bounce is particularly in Bitcoin showing that this might be a good store of the-- oh you look, you know, the argument of you want to run out of a country with a bag of gold bricks, or do you want to have a thumb drive with store of value.

Most people are going to say, hey, I'd rather have a thumb drive with actual value that can help me survive than a sack full of heavy metal. I think there's a lot of merit to that in light of what we're seeing in conflict.

And then the flip side is could we see governments like Russia use cryptocurrency as a way to work around sanctions? So it cuts both ways. But you know, I'm very intrigued to see what comes out of the cryptocurrency narrative in light of seeing a war. So a lot of things are going to be proven either right or wrong here.

- Doug Boneparth, it's good to have you on today. Bone Fide Wealth president.