MidSouth Week in Review:
August 13, 2018

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The U.S. and world markets declined today over worries about economic conditions in Turkey.  The Turkish Lira declined 20% this week and is down 40% year-to-date against the Dollar.  As investors sought safety, the U.S. Dollar hit a 13-month high against a basket of currencies.  The S & P 500 declined 0.2% for the week.  The consumer price index registered an annualized 2.4% increase, its biggest gain since 2008.  Corporate profits rose 23.5% in the 2Q, 3% above Merrill Lynch estimates.  The bank expects full year earnings to rise 20%.  2018 earnings are being helped because of lower U.S. tax rates ….. Morgan Stanley is concerned about signs of deterioration of internet and tech stocks.  The last time the momentum factor saw such excess returns on an 18-month basis was in early 2008, as the financial crisis began to pick up steam.

BuzzBits

William Shatner – was the spokesman for Priceline in the late ‘90s and because the company was cash poor, took his earnings in restricted stock at around a dollar a piece.  The stock later soared to above $100 a share.  “I had a good hunch about the stock,” Shatner said.  By 2000, the bubble burst and the stock traded back down to $1 by 2002, when Shatner cashed out and lost “millions”.  Priceline is now listed on the NASDAQ under Booking Holdings (BKNG) and is trading at $2,086 a share, after a 1-for-6 reverse stock split in 2003 – Wall Street Journal ….. I knew one of the founders of Priceline who also cashed out at the bottom and never recovered.  – Buzz

The Miss America Contest – had 25 million viewers in 1995 before declining to 5.4 million last year.  There are now only 4,000 women competing in the Miss American system vs. 80,000 in the early 1980’s.  The pageant’s $9 million in annual revenue is expected to dry up by next year as they lose a $4.3 million annual contract with Atlantic City and a $2 million contract with Disney.  Under new leadership half of the board members have left, citing concerns over governance.  In June, the board said the swimsuit competition would be eliminated – Wall Street Journal ….. Other declines include:  19% drop in viewers for the Oscars telecast last year, a 54% decline in NASCAR admissions since 2007, a 12% New York Times decline in print advertising revenue and a 24% 3-year decline in Gillette blade and manual razor sales.

Shrinking Market – In 1976 there were more than 8,000 publically traded companies vs. only 3,627 by 2016.  There were 23 listed publically traded companies for every million people in 1978 vs. only 11 in 2016.  In 2015, the top 200 companies by earnings accounted for all the profits in the stock market – Center for Research and Security Prices

Should You Let The Kids Know You Are Rich? – “I tend to suggest the client, keep their finances to themselves.  Letting a child know at a young age can make them entitled and diminish their work ethic.  An exception to this rule is dependent on the parents charitable nature and whether or not the parents instill that into the child.  By giving them too much info you take away their impetus and their drive to perform and do things.  A kid that knows they’re financially independent and wealthy will tend to work less than ones who feel they have more self-reliance.” – Leon LaBrecque, LJPR Financial Advisors

The Job Stoppers - Nearly half of Millennials (47%) and over a third of Gen X’s (36%) have tattoos, however they can hurt ones chances of being hired.  A recent survey of employers found that: 76% feel tattoos and piercings hurt chances of being hired, 39% believe the group reflect poorly on their employers, 42% feel visible tats are always inappropriate at work and 55% feel the same way about body piercings – Motley Fool ….. A Texas Tech study of those who get four or more tats or seven or more piercings, found they are ten times more likely to have an arrest record, a four-fold increase in drug use, other than pot, and a five-fold increase in having nine or more sex partners in the last year.  Those with low level tats were not much different than anyone else ….. The New York Yankees maintain a strict grooming policy banning long hair and beards that dates back to 1970 – New York Times

Chicago – Last weekend during a two-day, six hour period, the city had 66 shootings and zero arrests.  Thirty of the victims were shot Saturday night during a three-hour span between midnight and 3 a.m.  The city’s murder clearance rate is around 20% which means four out of five killers in Chicago are getting away with murder – New York Times ….. 650 were murdered in Chicago last year vs. 290 in New York City and 282 in Los Angeles – Wall Street Journal

Older Americans Bankruptcy – is up 200% in the 65-74 age group vs. 1992.  Bankruptcy filings for the under 44 age group is down for the period.  The medium debt for the bankrupt-seniors is $101,600 or three times the filers’ average income.  Bankruptcy filers in the 65+ age group have median net worth’s of negative $7,390 – Graying of U.S. Bankruptcy, University of Idaho

Proposed Change in Capital Gains Calculation

The Treasury Department could change the definition of “cost” for calculating capital gains, allowing taxpayers to adjust the initial value of an asset such as a home or share of stock for inflation when it sells.  Let’s say Mr. Thomas bought $200,000 of stock in 1985.  He sells the stock in 2018, when it’s worth $600,000.  Mr. Thomas would owe tax on the $400,000 gain, which, at the top capital gains rate, yields a total tax bill of $95,200.  Under the proposal, his $200,000 cost would be indexed for inflation.  In this case, he would only owe tax on roughly $122,400, for a total tax bill of $29,200.  Mr. Thomas would pay $66,000 less in taxes because of the inflation adjustment.

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. 

Prospera Financial will not accept orders and/or instructions transmitted by e-mail, and will not be responsible for carrying out such orders and/or instructions. Please do not transmit such information by email. Please be advised that communications regarding trades and/or account values in your account are for informational purposes only and should not be relied upon for accuracy. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the system manager. Securities and advisory services offered through Prospera Financial Services, Member FINRA/SIPC.