MidSouth Week in Review
September 04, 2020

The markets were doing great until Wednesday when the tech stocks got slammed, causing the NASDAQ to register a quick 10% retreat.  For the week, the S&P declined 2%.  On Wednesday, Tesla became the worlds 7^th most valuable company before retreating 25%.  The S&P had its best August since 1986 in logging five straight months of gains.  The Dow hit 29,000 Wednesday for the first time since February.  New orders for manufactured durable goods increased 11.2% in July for the third consecutive monthly increase.  61% of home purchase loans went to millennials in July 2020, up from 54% in June and the most since March of this year.  The unemployment level dropped to 8.4%.  The trade deficit hit a 12-month high in July.  Bitcoin declined from the 12,000 level to 10,200.  Gas prices at the pump are expected to be at the lowest level in years as wholesale gas prices had a quick decline from the $1.40 price range to $1.16 today.  Sources:  Wall Street Journal and New York Times

Have a nice Labor Day weekend.

BuzzBits

The S&P 500 – was begun in 1926 and has averaged a 10.2% annual return since inception.  $10,000 invested at 10.2% for 10 years would be worth $26,412 and $69,764 after 20 years – Schwab

The Greater Fool Theory – When you buy a hot overpriced stock and hope an even bigger sucker will come along and take it off your hands.

The Dow Jones – Industrial Average started in 1896 with 12 mostly ‘smokestack’ companies which included names such as: Tennessee Coal & Iron, General Electric and U.S. Rubber.  The index was expanded to 30 stocks in 1928.  GE was the last remaining original component when it was removed in 2018.  This week, Salesforce.com, Amgen and Honeywell were added to the index, replacing Exxon, Pfizer and Raytheon– Wall Street Journal

Buy Old Masters – They fetch a much better price than old mistresses – Lord Beaverbrook (1879-1964) ….. Now that I have lived through an actual plague, I totally understand why Italian renaissance paintings are full of naked fat people laying on couches – Chip Cox

Dear Robinhood – I’d like to report an error with the app.  There are a bunch of red numbers on my account page – Alex Harrison

Columbia – is removing the name of Dr. Samuel Bard from one of its dorms because he ran an ad in 1776 seeking the return of a runaway slave.  Dr. Bard was George Washington’s doctor and delivered Alexander Hamilton’s son Phillip ….. New York Governor Cuomo is taking down Andrew Jackson statues because he was a slave owner, but seems to have forgotten that New York was named after a slave trader, The Duke of York – B.V. Lawson

Zoom – The video conferencing company reported sales of $600 million for the FY ending in January.  Six months into the pandemic, that number has skyrocketed to $668 million in the 2Q, resulting in the stock realizing a 50% rise over the past month and 350% jump from its April low – Wall Street Journal ….. Zoom has declined 26% from its Tuesday high.

Ouch! – California is trying to stop insurers from abandoning fire-prone areas.  If homes become uninsurable, it could devastate the housing market.  The state has battled 87 fires since mid-August which have burned 1.5 million acres and destroyed 2,800 structures – New York Times ….. The temperatures in California are predicted to be 10 to 20 degrees above normal through Labor Day and to hit 107 in LA on Sunday.

Bad Returns – Historically publicly traded companies have purchased their own shares for their defined benefit plans which is good if the stocks go up.  However there were some big disasters this year.  Exxon had 39% of their stock in their plan and it declined 40%, giving the plan a 7-31 year-to-date return of -40%.  Chevron with 35% in their plan had a negative 30% return and ONEOK with 29% of their stock in their plan realized a -63% year-to-date return through 7-31, as their stock declined 71% - Bloomberg

Coronavirus Deaths – This week the CDC admitted that only 6% of the 153,504 deaths were from coronavirus.  That’s 9,210 deaths.  The other 94% had 2 to 3 other serious illnesses and the overwhelming majority were very advanced age – USA TODAY

BLM – The odds of a Black person being a homicide victim are 6.5x greater than a non-black – Buzz ….. The New York Police Department reported that black men are arrested and prosecuted in about 60% to 70% of every category of violent crimes, but are just 10%+ of the city’s population.  Shootings in New York City more than doubled in August and murders were up nearly 50% vs. 2019 ….. The CDC estimates 2020 will be the worst year for gun-related homicides since 1999 – New York Times

Working At Home – About 37% of U.S. jobs could be done from home full-time – The Kiplinger Letter

New Jersey – is becoming the most hated state as households flee in record numbers.  They have a new tax on millionaires, a 22.5% gas tax hike (bringing the total increase to 250% over 4 years) and now a new tax on frequency trades.  The state has the greatest exodus, where out of every 10 moves, seven have been leaving the state – ZeroHedge

Hotel Loans – A record 23.4% of their loans were delinquent in July 2020 vs. 1.34% a year earlier – Jay Kumar

WHY?

Why do men’s clothes have buttons on the right while women’s have buttons on the left?  Because when buttons were invented, they were very expensive and worn primarily by the rich.  Since most people are right-handed, it is easier to push buttons on the right through holes on the left.  Because wealthy women were dressed by maids, dressmakers put the buttons on the maid’s right!  And that’s where women’s buttons have remained since. 

Why do X’s at the end of a letter signify kisses?  In the Middle Ages, when many people were unable to read or write, documents were often signed using an X.  Kissing the X represented an oath to fulfill obligations specified in the document.  The X and the kiss eventually became synonymous.

Why is shifting responsibility to someone else called ‘passing the buck’?  In card games, it was once customary to pass an item, called a buck, from player to player to indicate whose turn it was to deal.  If a player did not wish to assume the responsibility of dealing, he would ‘pass the buck’ to the next player.

Why do people clink their glasses before drinking a toast?  In earlier times it used to be common for someone to try to kill an enemy by offering him a poisoned drink.  To prove to a guest that a drink was safe, it became customary for a guest to pour a small amount of his drink into the glass of the host.  Both men would drink it simultaneously.  When a guest trusted his host, he would only touch or clink the host’s glass with his own.

buzz@msifund.com

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