MidSouth Week in Review:
March 22, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Mar. 25, 2019 | RedChip Companies

The S&P was down 1.8% for the day and down 0.68% for the week.  On Wednesday, the Federal Reserve indicated they will not be raising interest rates this year due to global economic headwinds.  This triggered a sector wide sell off in Financials.  The S&P Regional Banking ETF (KRE) has fallen 8.0% since the Fed's announcement Wednesday.  The sell off in stocks continued today sparked by a softening in global economic data.  This caused 10-year Treasury yields to fall 3.2% and close at 2.45%, a level not seen since January 2018.


The 2019 IPO market is starting to heat up.  Jean maker Levi–Strauss went public on Thursday and shares surged over 30%.  Next week ridesharing app Lyft is expected to price their IPO. Lyft is leading off other tech unicorns such as UBER, AirBnB, Pinterest, and Postmates as they contemplate turning public later this year.  Have a great weekend!





Value-Growth Gap – is the widest in 70 years, according to a recent AB Bernstein study.  Bernstein says the dynamic of costly stocks getting more expensive and cheap ones getting cheaper is an opportunity to be exploited.  Numerous studies have found that over the long haul, value investors come out ahead because once their overlooked gems get attention, the upside is the most lucrative – Investment Officer


Get Out of Here! – I didn’t know if my three-year-old granddaughter Frances had learned her colors yet so I decided to test her.  I would point out something and ask her what color it was.  She would tell me and she was always correct.  It was fun to me, so I continued.  At last, she headed for the door saying, “Granddaddy, I think you should try figuring out some of this stuff for yourself!” – Buzz


Millionaire C Students – The majority of self-made success stories begin with C students.  Only 21% received A’s in school.  Individuals that struggle with academics are more likely to develop skills of resilience.  Future millionaires principally come from poor (41%) and middle class (59%) families.  High earners rely on their gut feelings, and describe themselves as nonconformists – Rich Habits:  The Daily Success Habits of Rich Individuals, Tom Corley


Sweden – Parents get 480 days of parental leave to share, 390 of which are paid out at 80%.  The Social Security rate for individuals is 7.0% vs. 38.42% for companies.  The top individual tax rate is 61.85%.  The sales tax rate is 25%.  The good news is that if you do have anything left, the estate tax rate is zero – New York Times, TradingEconomics.com


Auto Lease – costs will be up this year after a surge in leasing in 2016, when interest rates …. and by extension, leasing costs were much lower.  Buyers of Toyota Camry’s will see the cost on a new three-year lease will be 26% more ($2,800) vs. the cost of their last one – The Kiplinger Letter


Discount Shoppers – may soon get an unexpected benefit:  better odds when applying for a loan.  A history of discount shopping will boost an applicant’s chances of getting a personal loan.  Frugal people are better than average at quickly repaying loans.  Loan applicants who report high income will be classified as being more risky – Discover Financial Services


America’s Boys – 44% increase in suicide rate from 2007 to 2016.  14% diagnosed with ADHD.  97% play video games, average daily screen time; 6 hours, 41 minutes, average daily messages sent 39 vs. 69 for girls – Fast Company ….. Many are suffering from multidimensional perfectionism in many areas of their lives, setting unrealistically high expectations and feeling hurt when they fall short – Psychological Bulletin


Credit Card Debt – averages $5,736 per borrower, up 7.5% from 2015.  65% of millennials are most likely to be carrying balances.  If a credit card borrower made minimum payments on $5,000, it would take 18 years to retire the debt in paying $6,372 in interest – USA TODAY


Tax Collection – For every dollar owed the U.S. in Federal income taxes, the government only collects 84 cents or 84%.  The collection rate in Germany is 68% and a very low 62% in Italy – IRS, The Atlantic


Home Sales – by owner have declined from 21% in 1985 to 7% in 2018.  The average combined real estate commission paid has declined from 6.1% in 1991 to 5.0% in 2018 – National Assoc. of Realtors


How the Tax System Works - https://biggeekdad.com/2019/02/how-the-tax-system-works/




Stanford University


Lealand Stanford was a U.S. Senator and former Governor of California, who made his fortune as a railroad tycoon.  After his only son died of typhoid fever, Stanford and his wife traveled to Harvard to see about the school naming a building after their son who had completed one year at Harvard.  After waiting most of the day to see the president because the presidents secretary considered them just some deadbeat country hicks who wanted to see him, the president finally saw them and said, “A building?  We have over $7.5 million in the physical plant at Harvard”.  The president was pleased he could now get rid of Stanford and his poorly dressed wife.  The wife then turned to her husband and said quietly, “Is that all it costs to start a university?”  The president’s face wilted in confusion and bewilderment, as the Stanford’s walked away, traveling to Palo Alto, CA where they established the university in 1885, that bears their name and a memorial to a son that Harvard no longer cared about – Malcolm Forbes ….. Stanford accepts only one of every 23 applicants.  Stanford alumni have founded a large number of companies, which combined produce more than $2.7 trillion in annual revenue and have created 5.4 million jobs as of 2011, roughly equivalent to the 10th largest economy in the world (as of 2011).  Stanford is the alma mater of 30 living billionaires and 17 astronauts, and is also one of the leading producers of members of Congress.





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