MidSouth Week in Review:
September 13, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Sep. 16, 2019 | RedChip Companies

Because of positive news on trade the S & P rose 1.0% for the week.  However the biggest beneficiaries were the smaller cap stocks as the S & P Midcap Value (IJJ) rose 4.5% for the week and the S & P Small Cap Value Index (IWN) rose 6.6%.  The Dow and S & P 500 haven’t been this walloped by small-caps since 2016.  The yield on the 30-year Treasuries surged from below 2% to 2.37%, as supply surpassed demand.  Last week a record amount of corporate bonds were issued.  Average mortgage rates rose to 3.55% from 3.49% and will most likely have a big bounce next week.


Elizabeth Warren made a proposal for Social Security recipients to receive $2,400 more per year from their average payout of $16,248 per year.  To pay for the plan, a tax on the rich of 14.8% on those making $250,000+ annually would be imposed to be split equally by workers and employers.






Smaller The Better – For the week, stocks on the S & P 1500 selling between 0 and 5 a share averaged a 21% return vs. a 11% return for those selling between 5 and 10 and less than a 1% return for those selling above 90 a share ….. The FANG stocks (Facebook, Amazon, Netflix and Google) were up 1.1% for the week - Buzz


The Stock Market – Be awful nice to ‘em going up because you’re going to meet ‘em all coming down – Jimmy Durante


Falling Interest Rates – are propelling a wave of mortgage financing.  With the average rate on a 30-year home loan at its lowest in three years (3.56%), homeowners are taking advantage: Refinancing’s are up 224% since the start of the year and 40% in just the past four weeks.  About 35% of homeowners could save a bundle by refinancing now.  10 million could cut their rate by at least 0.75 percentage points – The Kiplinger Letter


Apple – introduced a new iPhone 11 Pro Max priced at $1,099+.  iPhone revenues slid 15% at the company last year and have forecast unit sales this year to be 30% fewer than the 98 million units sold in 2014.  Apple’s biggest problem is that there is very little uniqueness in the new phones vs. the older ones – Buzz ….. Because there is little wait time on the new iPhone, one analyst suggested a 20% to 30% sales decline vs. last year’s iPhone XS and Max sales.  Goldman Sachs cut their price target on the stock to $165 from yesterday’s closing price of $223.


Movie Theaters – generate about half of their profits from concessions which typically contain a 700% to 800% mark-up for popcorn and cokes.  Approximately 70% of gross ticket sales go to the studios.  Since 1929, ticket prices adjusted for inflation have gone up around 108% vs. a 1,188% increase on the price of popcorn – The Hustle


Wealth – By the eve of the Civil War, because of cotton, there were more millionaires per capita in Mississippi than anywhere else in the U.S.  In 2016, the average black family had a net worth of only $17,600 vs. $171,000 for the average white family.  Households of ages 65 to 74 have an average net worth of $1,066,000 vs. $288,700 for families between ages of 35 to 44, according to the Federal Reserve.


Grandkid Gifting – With the annual gift-tax exclusion, each grandparent can give up to $15,000 to each grandchild in 2019 without reporting it on a federal gift tax return.  But, if you also pay for the grands tuition, the gift does not require reporting.  It also might be used as a loophole to legally pass more than $15,000 annually to your kids – Buzz


High Tax States – A couple living in New York City making $500,000 annually would save $50,000 in state and local state by moving to a tax-free state.  Other states where residents would benefit financially from a move include: CA $46k, NJ $25k, IL $25k, CT $32k.  Income-tax-free states include: AL, FL, NV, NH, SD, TN, WA, WY.  California’s marginal tax rate of 13.3% is the highest in the country – Brian J. O’Connor ….. Billionaire Carl Icahn announced yesterday that he is moving his home and business to “sunny” Florida to avoid NY’s higher taxes - Bloomberg


Amazon – This year their network of contractors will handle 23% of its deliveries and 43% by 2024.  In 2015 UPS and USPS handled 91% of their deliveries.  Amazon requires that 999 out of 1,000 deliveries be on time – Wall Street Journal


Manners – Richard McEwan did $20,000 of damage by blasting through two holes at Trump’s golf course in Bedminster, New Jersey with his Ford Focus.  He then broke into Taylor Swift’s Rhode Island home where the police caught him without his shoes on.  Asked why no shoes, McEwan said, “I was raised to take my shoes off when you go into someone’s house.”  He said it was the polite thing to do – New York Times





Cumberland vs. Georgia Tech football

(222 to nothing)


The game was played on October 7, 1916, between the Georgia Tech Engineers and Cumberland College Bulldogs at Grant Field (now a part of Bobby Dodd Stadium) in Atlanta and was the most lopsided in the history of college football, with Tech winning 222-0.


Cumberland College, a Presbyterian school in Lebanon, Tennessee, had discontinued its football program before the season but was not allowed to cancel its game against the engineers.  The fact that Cumberland’s baseball team had crushed Georgia Tech earlier that year 22-0 (amidst allegations that Cumberland used professionals as ringers) probably accounted for Georgia Tech coach John Heisman’s (Heisman Trophy) running up the score on the Bulldogs, as Heisman was also Georgia Tech’s baseball coach.  It is speculated that Heisman may have deliberately aimed for a score of exactly 222 as a numerically significant retaliation to Cumberland’s 22.  He insisted on the schools’ scheduling agreement, which required Cumberland to pay $3,000 (equivalent to $69,000 in 2018) to Tech if its football team failed to show.  Another reason for Heisman’s plan to run up the score was the practice among the sportswriters of the time to rank teams based upon how many points they scored.  (Georgia Tech led 63-0 after the first quarter and 126-0 at halftime.  Georgia Tech added 54 more points in the third quarter and 42 in the final quarter).


Several myths have developed around the game.  Some have written that Cumberland did not have a single play that gained yards (Cumberland made no first downs in the entire game).  Cumberland purportedly committed 15 turnovers – nine fumbles and six interceptions – during the game.  Sportswriter Grantland Rice wrote, “Cumberland’s greatest individual play of the game occurred when fullback Allen circled right end for a 6-yard loss.”  At halftime, Heisman reportedly told his players, “You’re doing all right, team, we’re ahead.  But you just can’t tell what those Cumberland players have up their sleeves.  They may spring a surprise.  Be alert, men!  Hit ‘em clean, but hit ‘em hard!”  However, even Heisman relented, and shortened the third and fourth quarters from 15 minutes to 12. – Wikipedia 




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