MidSouth Week in Review:
April 16, 2018

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S&P was up 1.5% for the week on some of the lightest trading volumes seen this year.  The economy continues to strengthen as initial jobless claims fell this week.  The labor market is currently considered at full employment, and the unemployment rate is at a 17 year low of 4.1%.  Oil and gas futures hit 3 year highs this week as tensions grow in the Middle East.  Have a Great Weekend!

BuzzBits

Housing Market – The average rate of a 30-year fixed rate mortgage is 4.45% vs. 3.78% a year ago.  For a family resolving to pay $2,000 a month for a mortgage, the math works out that they can afford to only borrow $397,000 today vs. $443,000 in September.  The new tax law reduces how much larger home buyers will benefit from tax deductions, interest and payments.  Moody’s Analytics estimates the tax law will reduce home prices by 4% - New York Times ….. One of five conventional mortgage loans made this winter went to borrowers spending more than 45% of their incomes on mortgage payments, the highest since 2005 – Corelogic

“Slick Rick” Pitino – will not attend the Kentucky Oaks at Churchill Downs, despite having a horse in the race named Coach Rocks, because he vowed he wouldn’t set foot in the state after being fired by Louisville – Sports Illustrated

Facebook – One in five dollars spent on online advertising in the U.S. currently goes to Facebook.  The power of the company’s ad platform comes from the ability it gives politicians, brands, real estate agents, nonprofits and others to precisely target people on its social networks – New York Times

Negative Health Shock -  About 25% of those in the age 51 and older group have suffered a wealth loss of 50% or more.  A recent study tracking the group of 8000, found they were 50% more likely to die within 20 years after losing most of their assets – Barron’s

Auto Sales to China – China exported roughly 6x more new and used cars to the U.S. than the U.S. sold to China.  Why?  China charges a 25% tariff on imports vs. a mere 2% that the U.S. charges - CNN

Umbrella Policies – Investors take great pains to protect themselves from market volatility or to save a few dollars in trades, but shielding their wealth from legal judgements is often an afterthought.  A survey by Chubb of 200 individuals with $1 million+ of investment assets found that 10% were forced to cough up $100,000 in legal settlements and only 1 in 10 had excess liability coverage.  The coverage is cheap.  Jay Kumar in the office recently purchased a $1 million policy for $150 annually – Buzz

Student Depression – From 2009 to 2015, the number of students visiting counseling centers increased by about 30% on average, while university enrollment grew by less than 6%.  In the spring of 2017, nearly 40% of college students said they had felt so depressed within the last 12 months that it was difficult for them to function, and 61% of students said they had “felt overwhelming anxiety” - Center for Collegiate Mental Health …..10% of students said they “seriously considered suicide” within the last 12 months – American College Health Association

Retirement Home Health – The last thing you want to deal with in your golden years is your retirement community’s bankruptcy.  To assess a retirement home’s financial health, begin by checking its occupancy rate.  If it’s above 90 percent, the company is usually “doing something right.”  Most communities increase their fees by roughly 3.5 percent annually; if there hasn’t been a recent fee increase, it may be a red flag that the home is struggling to maintain occupancy.  Investigate the community’s debt rating, profitability, and cash reserves.  Finally, ask how involved residents are in major financial decisions – New York Times

The $3 Million Ride – The world’s most expensive car is the $3 million Bugatti Chiron.  Only 500 will be built over the next seven years.  An oil change costs $20,000 and it’s Michelin tires are $5,000 each.  Each Chiron is fully hand assembled from exotic materials such as magnesium and ceramics composite, fabricated within NASA-like tolerance by a team of dedicated crafts people over the course of six months.  The motor has 16 cylinders and four turbo chargers producing 1500 horsepower.  It’s top speed is 285 miles per hour – PENTA

Odds of Being Audited – have dropped to 1 in 260 vs. 1 in 90 in 2011.  Households making $1 million+ were scrutinized 4.37% of the time vs. 12.48% in 2011 – New York Times

Lunch Atop A Skyscraper: The Story Behind The 1932 Photo - Lunch Atop A Skyscraper: The Story Behind The 1932 Photo | 100 Photos | TIME - YouTube

buzz@msifund.com

This material was prepared by MidSouth Investment Management LLC, and does not necessarily represent the views of the presenting party, nor their affiliates.  This information has been derived from sources believed to be accurate.  Please note – investing involves risk, and past performance is no guarantee of future results.  The publisher is not engaged in rendering legal, accounting or other professional services.  If assistance is needed, the reader is advised to engage the services of a competent professional.  This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.  This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.  This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested.  All economic and performance data is historical and not indicative of future results.  Market indices discussed are unmanaged.  Investors cannot invest in unmanaged indices. 

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