MidSouth Week in Review
February 5, 2021

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Both the S&P and NASDAQ made new highs.  The S&P was up 4.6% for the week.  Because the public has gotten back to buying individual stocks, the small cap Russell 2000 Value Index surged 6.8% for the week.  Crude hit a 13-month high today, causing me to purchase a well-known oil company today, yielding 7%.  The yield on the 30-year Treasuries rose to 1.96%, a 12-month high.  The markets got a pop yesterday on the announcement of a drop in jobless claims.  Yesterday, the Senate voted against the proposal to raise the minimum wage to $15 an hour, which was a positive for hotels and restaurant stocks.  In addition to GameStop, a few other stocks also got hit hard this week:  AMC, dropped from last week’s high of 21 to 6, Koss declined from 127 to 17 today and Express fell from 14 to 3. Ouch!  The reason many of the hot stocks got slammed was because of the limits on trading placed by Robinhood and other online brokerages, that put in place fears of market instability that grew  more widespread.  Sources:  Wall Street Journal and New York Times

Investment Advice – “Unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market.” – Warren Buffett

Stuck At Home – It’s been a mere blessing to be at home with the wife these last few months.  We’ve caught up on everything I have done wrong in the last 20 years · Having some states lock down and some states not lock down is like having a peeing section in a swimming pool · Did a big load of pajamas so I would have enough clean clothes for this week – bizwaremagic.com

GameStop – rose to 483 a share last Thursday before declining to $51 this week.  Last week I shorted the March GameStop option at $138.  I figured the stock would have to rise by 50% for me to lose on the trade.  The option closed at $7 today.  The market value of GameStop dropped $31 billion from last week’s high.  – Buzz …..“Reasonable minds can disagree whether GameStop is worth $30 or zero, but not $200 or $300.” – Michael Pachter, stock analyst at Wedbush Securities

Biden Tax Increase Proposals – include: Raising taxes for those with an income level of $400,000+, changes in capital gains, and the estate gift tax exemption.  Some feel the current 20% tax on capital gains could jump to the same level as the tax on income, which for the highest earners would be 37% - THE WEEK

Fatties – In 2000, the residents of West Virginia had an obesity rate of 23.9%, the highest of any state.  By 2019, Colorado had nearly the same rate (23.8%) and it was the lowest of any state.  The U.S. is the most overweight country in the world with an obesity rate exceeding 42% - Just Eat by Barry Estabrook

Johnson & Johnson – applied for emergency approval of its single-shot coronavirus vaccine, a potential game-changer in the fight against the Covid-19 pandemic.  The vaccine is 66% effective at preventing moderate and severe cases of Covid-19, but 85% effective at preventing the virus’ most series symptoms ….. Because of Covid, birth rates in December went down.  This past December, state declines included: 8% in Florida, 5% in Arizona and 7% in Ohio vs. the previous year – Huff Post

Postage – The Alliance of Nonprofit members say they fear the Postal Service will raise rates by 5.5% to 9% this year for letters, magazines, catalogs and other items.  The Postal Service charged $70 billion for its services that cost them $80 billion to provide.  On-time delivery of periodicals plunged 45% in late December vs. 85% at the start of the year – Wall Street Journal ….. Only 64% of first class mail was delivered on time around Christmas.  Letters were taking weeks to cross the country – USA TODAY

Covid Racial Disparities – In  North Carolina blacks make up 22% of the population and 26% of the health workforce but only 11% of the vaccine recipients.  Black, Hispanic and Native American people are dying from Covid at almost 3x the rate of white people – Centers for Disease Control ….. Males are 1.39x more likely to die from Covid than females and 2.84x more likely to be admitted to the intensive care unit – Nature Communications

80% - The percentage of mortgage borrowers who have not refinanced over the past year despite record-low rates.  One-third of mortgage borrowers have a rate of 4% or more, making them likely candidates to refinance, and another 29% pay a rate between 3% and 4% and may benefit from refinancing – Bankrate Survey ….. Current mortgage rates: 30-year (2.76%), 15-year (2.04%) – Go Mortgage

Super Bowl LV – will be played on February 7 in Tampa with only 22,000 allowed to attend.  Tickets on Ticketmaster on Tuesday ranged from $9,500 to $35,000 for only one ticket – Ouch! – INSIDER

Trivia – The first drive-in theater went up in 1933 in Camden, NJ.  By 1958, there were more than 4,000.  Now there are only 321.  New York has the highest concentration with 28 sites and 45 screens – STATISTA

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