MidSouth Week in Review
October 16, 2020

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Oct. 19, 2020 | RedChip Companies

Led by the tech sector, on Monday the S&P hit its highest value in six weeks, followed by three down days and up today.  For the week, the S&P rose 0.2%.  Social Security announced a 1.3% increase in benefits for 2021, its smallest increase in four years.  Daily U.S. virus cases climbed to the highest level since August.  Natural gas rose to the highest level in more than a year and a half in anticipation of a colder heating season.  AMC, the worlds largest movie theatre company, said they may be out of business within six months without some government assistance.  Their attendance is down 85% year-to-date.  Sources:  Wall Street Journal and New York Times




Stock Market Lingo – Bull Market … a random market movement causing an investor to mistake himself for a financial genius.  Bear Market … a 6 to18 month period when the kids get no allowance, the wife gets no jewelry and the husband gets no sex.


Strange – LSU won the NCAA football national championship in 2019, yet LSU (1-2) is now only the third ranked team in Louisiana this year, behind LA Lafayette and Louisiana Tech – USA TODAY ….. LSU’s coach Ed Orgeron is the country’s second highest paid football coach ($8.7 million).  Louisiana Tech’s coach makes only $700,000 – Buzz


Value Investor – If you had put $100 in a value portfolio in 1927, the value portfolio would have grown 40x more than the growth portfolio by 2007.  However, over the past five years, the S&P Growth Index has grown 17.5% annually vs. only 8.6% for the Value Index.  Year-to-date the Growth Index is up 18.8% vs. a 11.0% decline in the Value Index – James Glassman


Getting Out – After being stuck at home forever, there now seems to be a surge on getting out of the house.  My country club’s July golf revenue was 50% above projection and tennis was up nearly 20%.  Bike sales are surging and there is now a shortage of dogs for all the new walkers on the streets.  On Labor Day, I visited a Sportsman’s Warehouse store (SPWH), whose sales were up a whopping 80% last quarter, and I asked them where the golf and tennis equipment was?  They said they didn’t carry athletic equipment, only hunting and fishing items.  Wow! – Buzz ….. About 1.7 million bikes are stolen every year in the U.S., which is about one every 30 seconds – 529 Garage


Altria – Thanks to the stress of coronavirus, social unrest and the election, cigarette sales are unexpectedly high this year.  Altria (MO), formerly known as Phillip Morris, said that the surge is reversing a long-term decline in cigarette sales.  MO has raised its dividend  55x over the past 51 years and offers a current yield of 8.7% - New York Times


Low Exposure Risks – Defense Department researchers conclude that an airline passenger wearing a surgical mask continuously would have to sit next to an infectious passenger for 54 hours to get a dangerous level of exposure through the air.  The threat of infection is greatly reduced because of the way air is circulated and filtered on airlines – Washington Post


$1.9 Million – That’s the amount retirement savers say they’ll need for a comfortable retirement, up from $1.7 million last year – Schwab Participant survey ….. In a survey of adults who plan to retire within 20 years, 53% expect to have less than $100,000 saved when they retire -MoneyRates


Renters Flock to The Burbs – Over the past year, the U.S. rental vacancy rates for downtowns has risen to 9%+ from slightly below 7% as work from home remains wide-spread and the suburbs look relatively clean.  Since March, San Francisco rents have tumbled 17% and Boston has seen a 7% decline.  Apartment rents in downtown Houston is around $2,650 vs. only around $1,500, 10 miles to the west – Wall Street Journal


Undergrad Enrollment – for first year college students declined 16% this year.  Total undergrad populations shrunk by 4% – National Student Clearing House Research Center ….. 30% of all students enrolled in colleges in 2018 were from immigrant families vs. 20% in 2000 – New York Times


Adopting a Dog – The up-front costs range from $610 to $2,350.  The annual costs of owning a dog can range from $650 to $2,115.  Nearly half of owners spend about $3,400 on their dogs annually – Rover.com


Florida Coastal Areas – have seen a decline in home sales in low-lying areas since 2013.  Climate change will cause more than 300,000 existing coastal homes to be at risk of flooding by 2045.  Key Biscayne, where the average elevation is 3.4 feet above sea level, has seen sales volume in 2018 sink one-third below its 2012 peak and prices to fall by 13% – New York Times



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