MidSouth Week in Review: Dec 21, 2015
Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund
After a nice rally leading up to Wednesday’s expected announcement of a quarter-of-a-point Fed rate hike, the stock market surprisingly declined. Even bank stocks declined after announcing a prime rate increase without an increase in deposit rates. Go figure! Oil stocks also declined again for the week. I believe oil stocks, not oil prices, will soon experience a nice rally. Fund redemptions and tax loss selling have been brutal, and the group should respond positively with the absence of selling pressure from these two groups. Studies show that stocks selling at their lows in mid-December usually outperform the market by February of the following year.
- Value Line Composite Index – is an equal weighted stock index comprised of approximately 1675 stocks. Through today, the index is down 13.0% year-to-date vs. a 2.6% decline from the S & P 500 which is a weighted index, based on company size. The Value Line Index is a good indicator of how the average investor is doing in the stock market – Buzz
- Flight Ticket Savings - The best day to book a flight is on a Sunday when the average fare is $543. The worst day is on a Friday when the average fare is 13% higher at $612. The best buys are available by booking U.S. flights around 2 months before departures vs. 77 days for a Caribbean trip and 140 days prior for a European trip – Expedia
- The S & P 500 Energy Sector – has been decimated over the past two years, falling 10.0% in 2014 and 23.8% this year. The energy sector has underperformed the S & P by 20%+ for two consecutive years. This sector underperformance has only happened five times since 1940. After the second year of underperforming, the next year has been positive 4 of 5 times with an average return of 13.5%. Go oil! – Bespoke Investment Group
- Crazy Weather – It was a record 73 in Buffalo Monday and for the first time in history they have not had a measureable snowfall to-date vs last year when Buffalo got 7 feet of snow in November alone
- Experience – has taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you’re generally better off sticking to what you know. The third is that sometimes your best investments are the ones you don’t make – Donald Trump, The Art of The Deal
- Interesting – Recent studies show that a zip code can be a very accurate indicator of life expectancy. In Baltimore, for example, life expectancy in the Upton/Druid Heights area is 63 vs. 83 in well-to-do Roland Park/Poplar, located three miles away. In the former, a third of the residents between ages of 10 and 17 are arrested each year vs. Roland Park where it is one in 50 – Wall Street Journal
- Back-to-Back Gains – On Monday the market completed a record tying 28 days without back-to-back gains, a sign of market uncertainly. This has only happened twice since 1970, with the market averaging a 5.3% advance six months after the occurrence – Wall Street Journal
- Hello Airbnb – Accommodations employment has shrunk 5% in LA after a minimum wage bill of $15.37-an-hour was passed by the city in 2014. The $6.86 minimum wage increase, a 98% jump, will put the hotels on the hook for $19.23 an hour (including payroll taxes) for full-time workers – Investor Business Daily
- NFL Extra Points – In a recent study of HNWIs (individuals with investable assets of $1 million+), 87% of the under 40 respondents expect some or most of their wealth management relationships to be conducted digitally over the next five years vs. 48% of the over 40 group. Wealth managers predicted only 18% of their clients would use a robo – Capgemini’s World Health Report
- Getting Smart - The percentage of men filing for Social Security at 62 fell from 56% in 1996 to 36% in 2013. For women it fell from 63% to 40% - Boston College Center for Retirement Research.