Marks Group would like to express our thanks to clients and families we work with for your understanding and flexibility to adapt to the new realities brought upon us by COVID-19. All meetings will continue to be conducted via phone call or video conference until further notice. Our Minnetonka office remains closed to visitors, but is consistently staffed during regular business hours by a handful of dedicated Marks Group team members. The rest of our advisors and staff are working from home. While it’s unfortunate we are unable to meet face-to-face for the time being, you can rest assured all operations are running at full capacity. If you have specific questions, please do not hesitate to contact us directly.

Ben Marks, Chief Investment Officer

July 27, 2020

Dear Investors,

The United States is five months into the COVID-19 pandemic, and it is difficult to go five minutes without talking, hearing or thinking about it.  The pandemic will end eventually. Yet currently, the US is failing miserably compared to other developed countries, and perhaps we should not be surprised. Americans do not like being told what to do, even when being compliant is in our own best interests. If the endgame for COVID is herd immunity, maybe we will get there sooner, but if an effective vaccine becomes the solution, our collective behavior will unfortunately have cost a lot more lives than was necessary.

Politicians have always had a difficult time saying no to government spending, and during a pandemic, saying no might end a political career. The concept of Modern Monetary Theory (MMT) has been lurking around Washington for years. Whether they publicly admit it or not, both parties have begun embracing this approach. MMT advocates suggest that rather than attempting to balance the federal budget, the government should spend whatever is needed to ensure full employment.

The United States is in the enviable position of having the world’s reserve currency. Most global financial transactions are done in US dollars. During times of uncertainty, investments based in US dollars are considered the safest in the world. In late March, as COVID-19 began to circle the globe, there was panic in the global financial markets. The crisis included a shortage of US dollars. The Federal Reserve quickly responded by increasing the supply of dollars to meet global demand.

If we worry less about deficit spending, our government can put more money in the pockets of those who need it most, invest in our nation’s crumbling infrastructure, and fix our healthcare system. All that sounds especially appealing these days given the current economic turmoil. The long-term implications of fully embracing MMT are less certain. Older Americans have lived through decades of insatiable global demand for US debt. If that privilege is abused, younger generations could pay the price.

Marks Group recently added gold to the majority of client portfolios. I own gold for the same reason I now wear a mask in public places; it’s insurance against adverse outcomes. Economic uncertainty and fears of inflation are typically what fuel the price of gold. The unintended consequences of MMT and the lack of clarity on how and when the pandemic ends are good reasons to own gold.

Thanks to unprecedented monetary and fiscal stimulus (and more on the horizon), financial markets have weathered the COVID- induced global recession amazingly well. A deeper look into the US stock indices reveals that a handful of mega-cap technology stocks have had an outsized effect on benchmark performance. Unlike during the Tech Bubble of 2000, these companies have real earnings and profitable business models. The pandemic has only increased our dependence on services provided by companies like Facebook, Amazon, and Google. In January, which seems like a lifetime ago, I wrote about the possibility of these companies becoming too dominant and eventually the government breaking them apart. What we have witnessed this year increases the likelihood of that outcome.

Our Marks Group team is as focused and dedicated as ever. I am proud of how we have adapted to the COVID era without missing a beat. We eventually look forward to resuming in-person meetings and business travel. For now, please know that we are always accessible via e-mail, phone, or video conference.

Be well and stay strong,

Ben Marks, Chief Investment Officer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Investing involves risks including possible loss of principal.

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