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Weekly Market Update for November 20, 2020

by Jim Ulland

The market is in a big “tug-of-war” with more lockdowns on one side and two very effective vaccines on the other. It is probable that the 95% effective vaccines will win this battle but getting from here to there is the challenge. The market normally would look through the next six months, see a robust economic recovery, and continue to trend higher. Therefore, the strategy most likely to reward investors is to stay invested or get invested, for those sitting in a high percentage of cash. Conservative investors or those who need dependable income can look to our #1 ranked fixed income strategy, Intelligent Fixed Income (IFI). We refresh this rank monthly which compares to ETFs and mutual funds with similar strategies (disclaimer below).

Equity investing is more complex. The market loves divided government, which in today’s case means the market would like to see the Republicans hold on to the Senate by winning at least one of the two January 5 runoff races in Georgia. Divided government means moderation, which is an ideal environment for stocks and businesses. Our equity strategies Intelligent Blend, Strategic Equity, and Defensive Growth have exceeded the New York Stock Exchange Composite substantially. Each has taken a slightly different approach to do so. But the common thread is the same, each strategy focuses on who will be the winners in the post-Covid world.

The biggest winners will continue to be the “work and live digitally” companies. Amazon has won the retail contest in the US while Alibaba has done the same in China. Digital entertainment has a lot of winners including gaming stocks, Facebook, its Chinese counterpart Tencent, and Netflix. In communication and information, Apple and Google will continue to dominate. In healthcare, the vaccine companies should ride high for at least the next two or three years and steady strategic players like United Healthcare will excel for the next decade. Elective surgery suppliers like Boston Scientific should have a comeback as the fear of doctors’ offices subsides. Electronic payment systems like Visa and lesser-known names should thrive. Home remodeling will continue strong at least until those do-it-yourselfers are freed from stay-at-home restrictions. There are hundreds of mid-sized and smaller companies, who few know, that also will benefit. Yet, one must be very sensitive to valuation even in these sectors. Let us know where we can help.

Some sectors are likely to lag a robust recovery. Brick and mortar retail is permanently impaired. Real estate is expected to come back, but slowly. The same is true for lodging, travel, oil & gas, and dining. In the slow-to-recover companies, one must ask if they have the financial resources and market positioning to grow post-Covid. Has the consumer shifted away permanently? Just surviving will not reward shareholders.

The economy continues a march to recovery. Unemployment filings rose slightly with the renewed lockdowns, but the number of workers already on unemployment declined by another 400,000. Stimulus talks appear to be on again in Congress. More stimulus would give the market a boost.

For the week, the Nasdaq was up +0.22%. The S&P 500 was down -0.77%. Monday the S&P 500 was +1.16%, Tuesday -0.48%, Wednesday -1.16%, Thursday +0.39%, Friday -0.68%.

Next week looks quiet unless your kids’ school just closed. Both our office and the markets will be closed Thursday and have a shortened day Friday.

*Ranking per Morningstar Direct in Publicly Traded Peer Group

*Publicly Traded Peer Group Requirements: Minimum $150 million in ETF/Fund; Excludes low-duration funds; Excludes closed-end funds; Includes share class with largest AUMs; Excludes real estate preferred funds; Minimum 3-year track record

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients/prospective clients are strongly urged to consult with their tax advisors regarding any potential investment. Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategies vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See for important strategy disclosures.


Ulland Investment Advisors

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