Stocks soar for third straight session amid record jobless claims numbers

Bimal Shah, Portfolio Manager at Thornburg Investment Management joins Yahoo Finance Live taking a closer look at recent market volatility and what that means for investors.

Video Transcript

JEN ROGERS: Welcome back to Yahoo Finance Live. The S&P right now is up a little over 4%. We are off the highs for the session, but still strong gains across the board on this day of historic jobless claims.

Right now I want to bring in our next guest, Bimal Shah, Thornburg Investment Management. So you know, three days in a row is what it looks like we're going to have here to the upside.

And we have seen some big names moving. We just did Boeing as our call of the day, and that stock's up 80% this week.

I guess the conversation now, though, that I keep hearing is an idea that we have to retest the lows that we've seen. Do you subscribe to that?

BIMAL SHAH: Look, the market has shifted from a panic mode to optimistic mode pretty quickly and vice versa. And I do not expect that to change anytime soon.

To your question about, you know, are we going to retest the lows, I absolutely believe so. If you think about what the market is doing right now, it's celebrating the unprecedented level of fiscal and monetary stimulus that the government has provided, which was absolutely necessary.

What I worry about, though, is that the market would pretty soon start focusing on, you know, the real issue, which is the health care crisis. And I do not see an all-clear sign when I look at the number of cases.

So yes, the road ahead is going to be choppy, in my opinion.

MYLES UDLAND: So Bimal, when you look at the market right now, are you compelled to do anything on a daily basis? Are you kind of sitting on your hands? I mean, how do you even navigate a market that's down 30% in nine sessions and then goes up 20% in three?

BIMAL SHAH: Right. So as a portfolio manager of Thornburg's long, short equity strategy, I have the flexibility of going long businesses that we really like and going short businesses that we don't like.

So what we are doing right now on the long side is we are upgrading the portfolio. We are taking advantage of the volatility that we are seeing in the market to upgrade the portfolio on the long side.

So what we are buying are businesses which have really strong balance sheets, really, you know, strong competitive advantage in their spaces. So think of, you know, names like Dollarama, which is a Canadian dollar store concept. Or think of MasterCard, which is a fantastic payments business.

So we have been buying those. We've been upgrading the portfolio by adding names like those.

On the short side, you know, we like to short businesses with weak balance sheets, with structurally challenged businesses, right. So without naming names, think about casual dining restaurants.

We have been, you know, short casual dining restaurants for a long period of time, because traffic continues to decline, and these restaurants continue to suffer.

The other area that we have been really short is, you know, think of paid TV networks, linear TV, right. Viewership continues to decline, and we have been short linear TV. We've been, you know, long new media like Netflix, and that has helped us a lot.

JEN ROGERS: I just want to follow up on the media play. I think it's kind of interesting, because there are maybe some clear losers, but there's other names that sort of fall in the middle. Because you talk about liking a good balance sheet, but you know, everyone's also watching Netflix. But you like-- I mean, that's a name that you think is going to do OK.

What others, like, in the media space-- are you thinking about the video games, like, the stay at home trade? Are those any names that appeal to you?

BIMAL SHAH: Absolutely. Yes. So we have also been long video game names like Activision, which has been a core holding for us in our long shot strategy, as well as in a lot other Thornburg strategies. And that trade has worked really well for us, so we continue to like those.

As I mentioned, you know, we continue to like some of the consumer staples like Dollarama, and you know, that has worked well for us.

JEN ROGERS: Bimal Shah, Thornburg portfolio manager, thank you so much for your time and walking us through some of your thinking here as you navigate this volatile market right now.