An acclaimed Morgan Stanley wealth adviser who helps manage $1.2 billion for the rich explains his approach to the market, and why he's telling clients to 'take the win'

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An acclaimed Morgan Stanley wealth adviser who helps manage $1.2 billion for the rich explains his approach to the market, and why he's telling clients to 'take the win'

Trader Robert Moran, right, and specialist Patrick King work on the floor of the New York Stock Exchange, Friday, Aug. 9, 2019. Stocks moved broadly lower in early trading On Wall Street Friday as investors again retreated to safer holdings in a market racked by fear and anxiety over trade disputes. (AP Photo/Richard Drew)

Associated Press

Trader Robert Moran, right, and specialist Patrick King work on the floor of the New York Stock Exchange, Friday, Aug. 9, 2019. Stocks moved broadly lower in early trading On Wall Street Friday as investors again retreated to safer holdings in a market racked by fear and anxiety over trade disputes. (AP Photo/Richard Drew)

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  • Seth Haye, recently named the best millennial wealth manager in the US by Forbes, said he's adopting a more flexible and cautious approach to the stock market because risks are growing.
  • Haye said he is encouraging his clients to consider the good news: They've had an exceptionally good year and can afford to sit tight.
  • Haye said he thinks stock market volatility is due to pick up, and he's waiting for that turbulence to set in so he can buy equities at discounted prices. Until then, he plans to sit tight and maintain a defensive approach.
  • Click here for more BI Prime stories.

It looks harder than ever to figure out what direction the market might take next - so perhaps it's a good time to take a step back.

That's the perspective of Seth Haye of Morgan Stanley Wealth Management. Haye's firm, the Oaks Group, manages $1.2 billion in assets, and he was recently named the best millennial wealth manager in the US by Forbes.

In an exclusive interview with Business Insider, Haye pointed out that the S&P 500 is still close to all-time highs in spite of a list of threats that just gets longer and longer. That includes concerns like the ongoing trade war and Brexit, and signs the US economy might be fading, like shaky manufacturing data and the yield curve inversion in August.

"Yes, the market may go higher, but risk-return, is it worth it?" he said. "I'm a big believer in patience when things seem maybe a little overpriced."

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Despite those concerns about valuations and threats, Haye said he's been delivering a lot of good news, especially to older clients who've been building up their wealth for many years, as in dollar terms, they've made huge gains.

"I get to share with them the great news that their accounts have made more this year in terms of total dollars than perhaps ever before," he said. "Clients are having some of the best years they've ever had."

Haye said that only makes it more obvious that it's not the time to get greedy and chase after every ounce of market gains they can grab. So he's been slowly reducing the amount of risk in his portfolios.

"We are probably 10% to 12% less exposed to the stock market right now than we normally would be," Haye said. "We've reduced our equity exposure and tried to take some profits."

Within that adjusted allocation, Haye has a slightly underweight stance toward discretionary technology companies and an overweight on consumer staples, financials, and utilities.

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Investors seeking exposure to those sectors can get it through the Consumer Staples Select Sector SPDR Fund, the Vanguard Financials Index Fund, and the Utilities Select Sector SPDR Fund. While he's targeting those more defensive sectors, Haye said he's sitting tight and anticipating an increase in market volatility.

"I just believe that now's a good time to take the win, to look for some dry powder, and take advantage of the next step," he said. "When things get really volatile, I get pretty excited."

The result of those two ideas - Haye's defensive tilt and his focus on flexibility - is that he's investing heavily in short-term Treasury notes.

"We are probably heavier on T-bills than I remember" at any time in his 15-year career, he said. "We have quite a few 30, 60, 90 day T-bills that we're rolling manually for clients right now."

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