MidSouth Week in Review
June 24, 2020

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Jun. 24, 2020 | RedChip Companies

From Buzz Heidtke (buzz@msifund.com)


Stocks plunged today as investors weighed rising coronavirus cases in key U.S. states against optimism about a quick economic rebound.  For the week the S&P rose 2.0%.  Jobless claims for the week declined to 1.5 million which marked the 13th straight week of declines.  Retail sales rebounded by 17.7% in May vs. April which was the biggest month to month increase since 1992.  Oil prices rose to the highest level since early March, causing retail gas prices to rise for the 6th straight week.  Wholesale gas prices surged to $1.27 per gallon from $1.13 last week.  Cuts in supply and a pickup in Chinese economic activity were responsible for the price rise.  Long-term 30-year mortgage rates hit an all-time low of 3.13%.  According to a Harvard study, the richest 25% have cut their spending more than any other group, causing small businesses in wealthier regions to have laid off 65% of their low wage earners.  Low income households reduced their spending by only 4%, having the effect of only 30% of those in low-income areas losing their jobs.  U.S. vacation rentals are up 20%.  The top states seeing growth are: WV, SD, OK, AK, WY and DE.  At the bottom of the spectrum are: IL (-41%), NY (-32%), HA (-30%) and MA (-29%).  Sources – New York Times and Wall Street Journal





Bailing Out Early – One study indicated that the average investor only realizes a 2% annual return because they buy at the top and sell out at the bottom.  According to Fidelity, 30%+ of investors in the 65+ age group, sold all of their stocks between February and May vs. only 18% of all investors – Fidelity Investments


A Bank – is a place where they will lend you an umbrella in fair weather and ask for it back when it begins to rain – Robert Frost (1874-1963)


In 1955 – Ray Kroc bought the franchise rights to McDonald’s.  Desperate for cash, he offered several potential investors half the stock in the company for $25,000.  By 1995, that stock would be worth $5 billion and would be worth $73 billion today – Buzz


Crazy! – HBO Max announced that it would temporarily be removing “Gone With The Wind” from its streaming service.  The 1939 classic that is the highest grossing film, adjusted for inflation, has enduringly shaped popular understanding of the Civil War and Reconstruction perhaps more than any other cultural artifact – New York Times


Strange Times – I can’t believe I can walk into a store to buy weed but I have to meet my hairdresser in a dark alley with unmarked bills to get a haircut – Sally Stumb


Racial Inequality – of personal investments.  Median household income of blacks, according to the 2018 Census was $36,300 vs. $80,000 for whites.  The six-year college completion rate was 38.9% for blacks vs. 64.8% for whites.  The default rate on student loans for blacks was 18% vs. 4% for whites.  The average debt upon graduation was $21,149, which was twice that of whites.  Black college grads were paid 82.4 cents for every dollar earned by their white peers.  72% of white households owned homes vs. 41.7% of blacks.  23% of white households headed by whites received an inheritance vs. 9% of black families.  The median inheritance in white families was $56,217 vs. $38,224 for blacks – New York Times ….. Per-person homicides for blacks are 7x higher than for non-blacks – Dan Gager


Robinhood – is a free stock trading app, that has added more than 3 million accounts in 2020, and now has 13 million.  Being bored at home has caused many to set up trading accounts.  Some of the action appears to be from people who would otherwise be gambling or betting on sports, both of which were shut down – Barron’s ….. This week a 20-year Robinhood option trader committed suicide because he thought he had lost more than $730,000 using the app – Reuters …..Schwab has also gotten into the action and will let you buy for as little as $5 a slice of a share of a company.  $5 invested in a share of a $318 stock would represent 1.65% of a share.


The Wealthy – will be the hardest hit in the slow economic recovery because of their high exposure to equity markets and market volatility.  Personal financial wealth grew 9.6% last year but could slow to a 1.4% rate through 2024 – Boston Consulting Group


Homes – “Prices in the suburbs will rise faster than those in city centers in coming years as buyers, now practiced at working at home, seek more social-distancing space”. – Robert Shiller, Yale economist ….. April inventory of existing homes was the lowest on record for the month – National Association of Realtors ….. 30% of Americans missed their housing payments in June vs. 24% in April – Apartment List


Skipped Debt Payments – increased to 106 million in May vs. around 35 million in April.  Student loan deferments increased to 79 million in May vs. 18 million in April – TransUnion


Pressure – is when you have 35 bucks riding on a four-foot put and you only have five dollars – Lee Trevino


1942 Cost of Living – The average income was $1,885 annually, a new house cost $3,770, a new auto $920, Harvard tuition was $420 per year and gas was 15 cents per gallon – Remember When







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