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Notes and Thoughts for November 6th, 2020

A “Blue Wave” trade developed over the past two weeks in which investors bought stocks that would theoretically benefit from a potential $5-6 trillion dollar infrastructure spending and stimulus bill (which Democrats have been pushing for).  This put a strong bid under economically sensitive areas like financial services (banks especially), industrials, materials and energy (especially clean energy).  The losers in the Blue Wave scenario were those areas that might be hit by greater regulation, especially the health care and pharma stocks.  Technology stocks were relative underperformers during this time, not because of the bill per se, but because with so many sectors expected to be lifted by increased spending, they were no longer the only sector with promising growth prospects.  Bonds, as one might expect, traded lower all October as more stimulus threatened to ultimately produce inflation. While we understood the rationale for the moves the market was making, we were not persuaded that the thesis was correct.  As such, we did not shift portfolios in October toward economically sensitive companies.  As it happened, there was clearly no Blue Wave and the stimulus, if we get one, is not expected to exceed one trillion.  The markets are reversing course today.  Health and tech stocks have benefited since the election, but banks are feeling some pain.  Bonds are performing well and pushing yields lower.  I’m not sure, from a stock market standpoint, it matters who eventually is declared the winner of the presidential race.  Eventually it will in terms of trade policy, but from a budget and regulatory standpoint the market is likely to regard the election business as usual. There is one caveat to the above – a president must be declared in the next several days.  A prolonged battle for the White House - with lawyers, mobs, and demonstrations – wasn’t good for the market in 2000 and probably wouldn’t be this time around either. Disclosure  Past performance is no assurance of future results. Trademark Financial Management, LLC (“Trademark”) is a registered investment adviser with its principal place of business in the State of Minnesota. Trademark and its representatives are in compliance with registration requirements imposed upon investment advisers by those states in which Trademark operates. Trademark may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration. This newsletter is limited to the dissemination of general information pertaining to its investment advisory/management services. Any subsequent, direct communication by Trademark with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A complete list of all recommendations will be provided if requested for the preceding period of not less than one year.   It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.  Opinions expressed are those of Trademark Financial Management and are subject to change, not guaranteed and should not be considered recommendations to buy or sell any security. For information pertaining to the registration status of Trademark please contact Trademark at (952) 358-3395 or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). For additional information about Trademark, including fees and services, send for our disclosure statement as set forth on Form ADV from us using the contact information herein or by calling 952-358-3395. Please read the disclosure statement carefully before you invest or send money. Any reference to a chart, graph, formula, or software as a source of analysis used by Trademark Financial Management staff is one of many factors used to make investment decisions for your portfolio.  No one graph, chart, formula, or software can in and of itself be used to determine which securities to buy or sell, when to buy or sell them, or assist any person in making decisions as to which securities to buy or sell or when to buy or sell them.  Any chart, graph, formula, or software used is limited by the data entered and the created parameters. The data was obtained from third parties deemed by the adviser to be reliable. Nonetheless, the adviser has not verified the results and cannot be assured of their accuracy.

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