MidSouth Week in Review
November 06, 2020

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Nov. 12, 2020 | RedChip Companies

The S&P was up 6.9% for the week, its best week since April.  On Wednesday, I and many others had our worst day ever vs. the S&P, which rose 2.2% due to a big surge in big-cap tech stocks.  The next day I had possibly had my best day ever.  Wild!  It looks as if Biden will be our next president and we will have a Democratic controlled Congress and Republican controlled Senate, which will be positive for the stock market vs. when one party is totally in control.  The Dollar hit a 2-month low.  Crude declined to the $33 level before rising to $37+ level.  Natural gas rose from $1.80 last month to the $3.40 level.  Why?  Winter is coming and more people will be staying at home because of the coronavirus.  According to Freddie Mac, 30-year mortgage rates declined to 2.78% vs. 3.69% a year ago.  The trade deficit narrowed in September as exports rose.  Bitcoin soared above $15,000, nearing its 2017 $20,000 high.  The unemployment rate declined to 6.9% last month with 638,000 new jobs added.  The New York Times reported that their online ad subscription revenues have now surpassed their print subscription revenues.  Their print ad revenues declined 30% and online ad revenues declined 13%.  Sources:  Wall Street Journal and New York Times




S&P Performance – after presidential elections, going back to 1968.  When a new political party assumes the presidency, the S&P has averaged a negative 1.02% return over the following 12-month period.  If the incumbent wins, going back to 1964, the S&P has averaged a 14.4% return over the following 12-month period.  Why the difference?  Uncertainty vs. certainty. – The Hustle


Purgatory – As a fellow was walking around Hell one day, he saw a beautiful woman with a lawyer.  He asked the Devil what the lawyer was doing with her.  The Devil replied, “Who are you to question a woman’s punishment!”


Mark Zuckerberg – Before he left for college in 2002, his dentist dad offered him a choice of a Harvard education or a McDonald’s franchise.  He took Harvard and started Facebook in his dorm room and dropped out of college during his sophomore year to work on his new company.  Nice move! – INC.


Air Travel – The latest trend is buy-one-get-one deals offered by airlines desperate to get people back on planes.  Ticket prices are down 31.6% since March 2019.  Round trip Christmas flights from Chicago to Vegas are $81 vs. the normal $350 – Wall Street Journal


U. S. Apartments Rents - in 15 of the 100 largest rental markets have shot up 10% to 15% over the past year, all second-tier markets.  But in the most expensive rental markets, such as NYC, SF, Boston, LA, DC and San Jose rents have plunged 13% to 21%.  Why?  Because many no longer need to go to the office and can work from anywhere, or have lost their jobs, they can branch further out to cheaper rentals – Wolf Street


Vitamin D – A Chicago September study of 489 patients showed that the risk of testing positive for coronavirus was 1.77x greater for those with a vitamin D deficiency.  Another study suggested vitamin D deficiency was associated with a greater risk of catching coronavirus.  Half of Americans suffer from vitamin D deficiency – Wall Street Journal ….. Vitamin D helps build healthy bones, but also has the potential benefits of staving off dementia and protective against certain cancers, such as colon and breast cancer – JAMA


Health Savings Accounts – If you qualify, HSA’s have one of the best tax loopholes available.  Funds are deposited with pre-tax dollars and are pulled out tax-free for medical treatments and medicine that insurance doesn’t cover.  Money deposited can be invested and grow tax-free.  To qualify you must have a health plan that meets certain criteria, including a high deductible ($1,400+).  For 2021, contribution limits are $3,600 for individuals and $7,200 for families.  Some employers contribute some money to HSA’s – New York Times


Looting and Vandalism – largely set off by the George Floyd killing, has caused businesses to have sustained at least $1 billion in insured losses – Insurance Information Institute


Tax Planning – One out of five US. Companies that reported profits of $10 million+ in 2019 paid zero taxes, with the government refunding them more money than they paid – Washington Post


Leaving New York City – New York levies an 8.8% tax on wages for high earners and NYC takes another 3.9% for nearly a 13% combined tax, causing nearly half of $100,000+ earners to say they are considering leaving the city.  Once Covid hit, the floodgates opened with the recognition that people can work from home – Finance ….. By August 31, 32,000+ New York City restaurants were marked closed on Yelp.  A survey by Hospitality Alliance found that 87% of New York City restaurants were unable to pay all of their August rents – New York Times ….. States with the highest sales tax rates: TN (9.55%), AR (9.53%), LA (9.52%), WA (9.23%), AL (9.22%).  The lowest include: AK (1.76%), HA (4.44%), WY (5.34%), WS (5.43%), MA (5.5%) - AARP


A Smart Mom – Beth Gill’s son could not go to sleep after seeing a cockroach in the bathroom so she placed panda bears on each side of his bed for his protection and he was immediately down for the count.


Coronavirus Deaths – in hospitals are now only 7.6% vs. 25.6% early during the pandemic – Alan Turing Institute


Bliss – see attached video





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