MidSouth Week in Review:
July 9, 2018

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The markets turned down this morning as the U.S. and China were set to begin levies against each other today.  By the close, the markets had reversed with the S & P 500 closing up 0.7% for the day and the NASDAQ 100 registering its biggest one-day advance since June 1.  Last week I bought Daimler (DDAIF) in anticipation that Germany and the U.S. would agree to eliminate auto tariff’s.  Yesterday the “Big Three” German auto manufacturers (Mercedes-Benz, Volkswagen, BMW) popped 5% on the announcement that German Chancellor Merkel favored eliminating the car import tariffs.

Unemployment rose to 4%, but the number who are claiming unemployment benefits for longer than a week is near its lowest level since the 1970s ….. Outstanding consumer loans rose 18% in the 1Q ….. The gap between long-term and short term Treasuries narrowed to nearly 11-year lows.  The difference between the two and 10-year notes is 0.26, its narrowest since 2007.  Going back to 1975, whenever short-term rates have exceeded longer-term rates (inverted yield curve), a recession has always followed.  The yield on 10-year Treasuries declined to 2.83% from the May high of 3.11%.

BuzzBits

Four Stocks – contributed to 84% of the S & P 500 year-to-date return:  Amazon (36%), Microsoft (18%), Apple (15%), Netflix (15%).  The  four stocks averaged a 44% return and carry an average price-to-earnings ratio (PE) of 137 – Goldman Sachs ….. Academic studies suggest that companies carrying PEs of greater than 50, tend to underperform - Buzz

Beifeld’s Principle – The probability of a young man meeting a desirable and receptive young female increases by pyramidal progression when he is already in the company of: (1) a date (2) his wife (3) a better-looking and richer male friend.

Crypto Coin Graveyard – “I accept figures I have seen that 80% of Initial Coin Offerings (ICOs) were frauds and 10% lacked substance and failed shortly after raising money.  Most of the remaining 10% will probably fail as well.” – Aaron Brown, Bloomberg Prophets

Umbrella Policy – Do you own a dog or have a swimming pool or have a long term commute?  If so, you have an above average chance of being sued. You might consider an umbrella policy that picks up where the liability limits on your homeowners and auto policies leave off.  Going through your homeowner insurance carrier, a policy typically costs $150 to $300 a year on the first million and about $100 for each million of coverage thereafter.  In 2016, half of personal injury awards and settlements were $100,000+; 19% were $1 million+  – Kiplinger’s Personal Finance

Treat Pain Without Opioids – When a study group with moderate-to-severe back, hip or knee osteoarthritis pain were given either opioid meds or non-opioid meds, such as Tylenol,  The non-opioid group reported significantly less pain and fewer side effects over the one-year study period – Erin Krebs, MD

Rich and Thinking About Divorce? – Do it now because it will become very expensive in 2019.  Alimony payments are a deductible item in 2018.  Alimony payments that are finalized after year-end will no longer be a deductible item from taxes.  Divorce agreements done before 2019 may continue to deduct alimony payments in perpetuity – New York Times

School Boys vs. Girls – In a study of 10,000 school districts from 2008 to 2014, in no district did boys, on average, do as well or better than girls in English and language arts.  In math, both do about the same through the 8^th grade, but boys from richer districts tend to test better than girls from richer districts.  After elementary school, girls lose confidence in their math skills.  One math teacher said, “We will have boys shouting out the answer.  If they are wrong, they don’t care.  If a girl gets it wrong, they will not answer another question.  You see them shut down.” – New York Times

San Francisco – The Federal government now classifies a family of four earning $117,400 as low-income in the three counties in the Bay Area.  The fair market renters pay for the area is $3,121 for a two-bedroom apartment and the median home price is $1 million+.  At the beginning of the month the city raised the minimum wage to $15 an hour – New York Times

Calculators – About 30 years ago, Mat Pilcher gave me his huge hand crank calculator that he had purchased used in 1929 for around $650 while working on Wall Street.  In 1957, Casio sold an electric mechanical calculator that weighed 308 pounds for the equivalent of $11,000 in today’s dollars.  Around 1972 my officemate Don Bathrick bragged about picking up a hand calculator for around $150 that had been selling for around $500 a few months earlier.  By the end of the year it was selling for $10 to $15 and they are now being offered at giveaway prices.  Today the new IBM Summit super computer at Oak Ridge is the world’s smartest and most powerful, capable of 200,000 trillion calculations per second – Buzz

Health Meets Wealth – Stress about debt and finances can be just as detrimental to physical health and job performance as serious illness – PLAN SPONSOR

State Gas Taxes – The highest in cents per gallon: PA (58.7), CA (52.5), OR (49.4), HA (46.0), NY (44.3).  The lowest:  AK (12.3), OK (17.0), MS (18.8), NM (18.9), AZ (19.0) – Tax Foundation

Anthony Bourdain – left his entire estate, estimated at $1.21 million, to his 11-year old daughter.  Bourdain’s property includes $425,000 in cash and savings, $35,000 in brokerage account, $250,000 in personal property, and $500,000 in “intangible property including royalties and residuals,” according to court documents.  They also reveal that Bourdain had a $1 million mortgage liability for an unspecified property – Sam Dangremond

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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