MidSouth Week in Review:
April 18, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Dull, dull, dull for this holiday shortened pre-Easter week.  The S & P was down 0.1% for the week.  About the only action was in the health-care stocks that are down 8.4% for the month and declined 2% on Tuesday after United HealthCare’s CEO warned investors that the Medicare for All bill proposed by House Democrats threatens to “destabilize the nation’s  health system”.  Tuesday’s  health-care decliners included:  United Healthcare (-4.0%), Humana (-7.4%), Cigna (-7.8%), and HCA Healthcare (-10.2%).  The NASDAQ-100, an index made up of the largest non-financials listed in the NASDAQ, made a new high yesterday.

The markets will be closed tomorrow in observance of Good Friday.  Hope everyone has an enjoyable Easter meal with family and friends - Buzz

BuzzBits

Value vs. Growth – Since 1927, value stocks have posted an annualized return of 12.6% vs. 9.9% for U.S. growth.  The current spread between the cheapest and most expensive stocks is possibly the widest in history says Nomura Instinet – Barron’s ….. Value investing favors stocks that look cheap using metrics like the price-to-earnings and price-to-book ratios.  Growth investing, on the other hand, favors stocks with higher than average annual increases in revenue and earnings – Wall Street Journal

Full Circle Success – At age 4 success is not peeing in your pants.  At age 12 success is having friends.  At age 16 success is having a driver’s license.  At age 20 success is having sex.  At age 35 success is having money.  At age 60 success is having money.  At age 70 success is having sex.  At age 80 success is having a driver’s license.  At age 85 success is having friends.  At age 90 success is not peeing in your pants.  It all comes full circle, whether you like it or not – Thomson ONE

April 15 – was tax day in the U.S. this year, but also the day of the terrible blaze that ravaged Notre Dame Cathedral in Paris.  Other sad and tragic events that occurred on April 15 include:  The Boston Marathon bombing (2012), the sinking of the Titanic (1912) and the death of Abraham Lincoln (1865).

Canada Pot Sales – are only $112.5 million to-date vs. a $400 million projection.  Why?  One source said the black market price is roughly half of the retail price.  Also Canada doesn’t allow retailers to sell edible products like gummy bears or chocolate made from the drug.

2017 Tax Law – According to an NBC/WSJ poll only 17% believe they got a tax cut.  However, according to the Tax Policy Center and SurveyMonkey, 81.7%+ in the $50,000+ income brackets got a tax cut – New York Times

Car Dealers – profit margins are the lowest in history with an average mark-up of only $420 per new vehicle vs. $908 from their finance and insurance business.  Last year, 46% of purchases got an extended warranty.  The profit margin on new car sales was 1.2% vs. 2.1% in 2014.  Nearly 84% of new-car buyers arrange financing through a dealership – Wall Street Journal

Boy Crisis – Boys’ suicide rate goes from only slightly more than girls before age 14 to three times that of girls’ between 15 and 19, to 4 ½ times that of girls between 20 and 24.  According to a study in the Journal of Marriage and Family, every 1% increase in fatherlessness in a neighborhood predicts a 3% increase in adolescent violence.  It starts early.  Before six months of age, the less interaction a boy has with his dad, the lower his mental competence.  Aggregately, this leads to my predicting that the biggest gap between boys who are successful and unsuccessful in the future will be the gap between those who are dad-enriched versus dad-deprived.  A boy who is not academically inclined may be bored by physics and chemistry until he learns that to be a highly paid welder, he needs them.  Then he sees purpose, and his motivation changes.  Solutions to the boy crisis must be addressed simultaneously in the family, in schools and by policymakers.  Schools need male teachers, vocational education and recess – Fed Chairman Jerome Powell

Tax Brackets – In 2016, it took $480,804 of adjusted gross income to make the 1% club, $197,651 to be in the top 5% of earners and $139,713 to be in the top 10% and $80,921 to rank in the top 25% of income – IRS ….. 12% of earners will rank in the top 1% for at least one year; 39% in the top 5% for at least a year; 56% in the top 10%, and 73% in the top 20% - Wall Street Journal ….. Last week Sen. Bernie Sanders acknowledged his seven figure net worth status.  An estimated 17.3 million or 5% of the population are millionaires – Financial Advisor Magazine 

The Average Cost of a Year of College – has risen from $7,142 in the 1996-97 period to $21,370 today – College Board

Nashville – Great article about Nashville from the British daily newspaper, The Guardian - https://www.theguardian.com/cities/2019/apr/16/bachelorettes-bibles-and-amazon-nashvilles-boom-brings-growing-pains

buzz@msifund.com

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