MidSouth Week in Review:
September 28, 2018

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S & P 500 was down 0.6% for the week but registered its biggest quarterly gain in four years.  Sears declined 18% today in becoming a penny stock over worries about their ability to pay off their maturing bond issues.  Lumber Liquidators (LL - $15.50) made a new low today due to weak housing starts and tariff worries that has seen lumber futures decline 47% since June.  The Fed had its third interest rate hike this year with four more hikes expected in 2019.  According to Freddie Mac, the 30-year fixed-rate-mortgage hit 4.72%, the highest level since April 2011.  Mortgage applications increased 2.9% for the week with refi’s representing 39.4% of the total.  The U.S. Consumer Confidence hit an 18-year high, pointing to substantial growth in the economy.  Global oil prices hit a four-year high over worries about production cuts in Iran and Venezuela.

BuzzBits

Presidential Cycle – Going back to 1896, the next three quarters of the four-year presidential cycle are the strongest.  The average returns over the next three quarters have been: 4.0%, 5.2% and 3.6% for a total return of 13.3% and an annualized return of 18.1% - LPL Research

I Think I Love You – Tiger Woods 34-year-old girlfriend Erica Herman owes an investor $240,233 after a chain of five Orlando nightclubs failed.  As operations director of Tiger’s South Florida restaurant, The Woods, Herman is having her $1,586-a-week wages garnished.  She was evicted in 2014 from her $1,300 a-month apartment – Daily News

Recession Looming? – It wouldn’t be surprising to see the yield on 10-year Treasurys exceed 5%, from the current 3% level.  As short and long-term interest rates normalize, equity prices are also likely to return to historic price-to-earnings ratios.  If the price/earning (PE) ratio of the S & P 500 regresses to its historical average, 40% below today’s level, $10 trillion of household wealth would be wiped out – Martin Feldstein, chairman of the Council of Economic Advisers under Reagan and Harvard professor

Widows – Only 14% say they were making financial decisions by themselves before their spouse died and none afterwards.  86% report having to do so alone.  One study suggested that 50% will become seriously ill within a year after the death of their spouse suggesting the following to reduce stress during that first year:  (1)  Don’t sell your house or move (2)  Don’t quit working and/or start working during the first year  (3)  Make no major investment decisions.  According to a Merrill Lynch study, four-in-ten women experiencing widowhood, use it as a trigger to begin working with a financial advisor. A financial advisor can help by creating a budget that includes outflows and inflows such as social security, retirement portfolio disbursements, annuity payments, spousal benefits, and pension income – Financial Advisor Magazine

Used Car Sales – The gap between the price of a new and used vehicle is as wide as it has been in years, pushing an increasing number of consumers to the used-car lot and putting pressure on auto makers to deepen discounts on new cars to keep them competitive.  Why?  Sticker shock.  The average price of a new car is $38,848, according to Edmunds.com vs. the expectation of less than $30,000.  The average monthly payment on a new car is $536 vs. $507 last year and $463 five years ago – Wall Street Journal

Zero Taxes – 44.4% of the taxpayers paid no federal income taxes for tax year 2017 – Tax Policy Center

Soft Housing Market – 14% of single-family homes nationwide lowered their asking price in June.  The biggest drop was in San Diego at 20% - Freddie Mac ….. The number of homes going under contract declined in August, for the fourth time in five months – National Assoc. of Realtors

World Life Expectancy – was only 31 years in 1900 and 47 in the U.S.  Until the 19th century, human life was dominated by infectious illness.  Up to 50% of children during that period died before the age of 5, almost all from infections – Protecting the Herd

Bill Belichick – who was born in Nashville, was named coach of the Jets in 2000, before resigning a day later to become the head coach of the New England Patriots.  Since then, he had 12 appearances in the AFC Championship game, been in eight Super Bowls, and winning five.  However his eight former assistants who became NFL coaches haven’t fared as well in winning only 39% (9-14) playing against the Patriots and a mere 40% overall winning percentage.

On This Date – in 1924, the first around-the-world flight was completed in 175 days by two U.S. Army planes when they landed in Seattle.  This January, airline exec Krisiwda Merhi broke the world record for flying around the world on scheduled commercial flights, circulating the globe in 53 hours – Traveller.com

The Train of Life

At birth we boarded the train and met  our parents,

and we believe they will always travel on our side.

However, at some station our parents will step down from the train,

leaving us on this journey alone.

As time goes by, other people will board the train;

and they will be significant i.e. our siblings, friends, children,

and even the love of your life.

Many will step down and leave a permanent vacuum.

Others will go so unnoticed that we don’t realize they vacated their seats.

This train ride will be full of joy,

sorrow, fantasy, expectations,

hellos, goodbyes, and farewells.

Success consists of having a good relationship

with all passengers

requiring that we give the best of ourselves.

The mystery to everyone is:

We do not know at which station we ourselves will step down.

So, we must live in the best way,

It is important to do this

because when the time comes for us to step down

and leave our seat empty

we should leave behind beautiful memories

for those who will continue to travel on the train of life.

I wish you a joyful journey on the train of life.

Reap success and give lots of love.

more importantly, thank God for the journey.

Lastly, I thank you

for being one of the passengers on my train.

Buzz

P.S. I am not planning on going anywhere soon.

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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