MidSouth Week in Review
February 26, 2021

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Mar. 2, 2021 | RedChip Companies

Before yesterday, I was possibly registering my best ever one-month return as small companies have been outpacing their counterparts by the widest margin in more than two decades.  However, yesterday I got hit with my worst ever one-day decline as both the NASDAQ and Russell 2000 posted 3.5% declines as Treasury yields shot up.  As the 10-year Treasury yields have jumped this year from 0.9% to 1.5%, big bank stocks have risen nearly 20%.  For the week the S&P declined 2.5%.  GDP rose 4.1% in the 4Q.  Weekly jobless claims declined 111,000 in January to 730,000.  Wholesale gas hit a 20-month high of $1.96, so expect a quick price bump at the pumps.  Gamestock surged from Tuesdays 40 low to 184 yesterday before falling below 100 today.  Bitcoin rocketed to 58,000 this week before declining to the 44,000 level.  Tesla suffered a 2-day 22% decline from last Friday’s high to Tuesday’s low.  Sources:  Wall Street Journal and New York Times




Stock Market Returns – over the past 45 years.  The average annual return was 15.8%.  37 of the 45 years registered positive returns.  The average return for taxable bonds over the period was 6.5%, with 42 of the 45 years registering positive returns – BTN Research, Bloomberg Barclays


Harvard – While Ross Perot was speaking to some Texas ranchers about the financial plight of our prison system and that it costs more to keep a man in the penitentiary than it does to send  him to Harvard, an old guy stood up, pushed his hat back and said, “Hell, Ross, the answer is simple.  Send those jailbirds to Harvard.” – Ross Perot, Life


The Big Gainers – Since Jeff Bezos took Amazon public in 1997, their stock has had an annualized return of 38.4%.  Monster Beverage (MNST), the energy drink company, had an annualized return of 41.7% over the same period.  A $1,000 investment in MNST in 1997 would be worth $3.9 million today – Qz.com


Mortgage Rates – that plunged to record lows in 2020 and early this year are spiking now – and are above 3% for the first time since November.  Zillow economist Matthew Speakman warns that “the days of all-time low rates may be a thing of the past.”  But he’s also giving borrowers a reality check, reminding them that “mortgage rates remain very low by historic standards.” – Moneywise.com


Strange Stats – Due to Covid, Americans’ life expectancy has dropped 1.2 years.  For Black Americans, it’s down 2.1 years; for Latinos, 3 years · 44% of Whites have lost income since March 2020 and 24% have low confidence in their ability to pay rent · The Covid death rate for Black Americans ages 30 to 49 is five times that of white Americans · The Covid death rate for Native Americans ages 18 to 29 is 13 times that of white Americans · Latinos make up 20% of all 30 to 49 year-olds yet 45% of all Covid deaths in this age group – Mother Jones 


Ouch! – If during the March stock market bust you would have gotten conservative and purchased a 30-year Treasury bond yielding 0.837%, you would be hurting today.  The current yield on the bond is now 2.30% and has declined 44% from its March high.  Bond yields have risen recently over inflation worries.  The yield on the 10-year Treasuries is 1.46% vs. the S&P 500 yield of 1.47% - Dan Gager


Rich Bitch – Lula, a border collie from Nashville was left $5 million by her wealthy owner Bill Dorris – The Week


Crude – Goldman Sachs is now projecting crude will hit $75 a barrel in the 3Q on increasing demand and a slow rebound in supply.  Oil prices have risen 25% this year.


Real Estate Commissions – Many believe that the long-time commission rate of 6% will soon fall immensely since 63% of buyers are now making offers on houses they haven’t seen in person.  Across much of Europe and Asia, commission rates are significantly lower.  In Singapore and Britain for example, agents generally earn 1% to 2% on sales – New York Times


Highway Crashes – Americans drove 15% fewer miles last year but the number who died increased 7%.  Why?  Experts said less-congested roads led to more speeding and aggressive driving – The Washington Post


Heart Failure – occurs when the heart muscle becomes weakened and can no longer pump blood efficiently.  It can be caused by high blood pressure, heart valve disease, heart attack, diabetes and other disease conditions.  Drinking two cups of coffee a day conferred a 31% reduced risk - New York Times


Firearms – More than 2 million were purchased last month and 23 million last year, a 64% jump over 2019 – The Washington Post


Community College Enrollment – declined 10% from fall 2019 to fall 2020.  At black community colleges, the decline was 13%, 10% at White and Hispanic community colleges and 5% at Asian schools – Associated Press ….. The most selective 4-year institutions, both public and private, saw a record-breaking 17% increase in applications this year.  Why?  Because of the pandemic, most of the schools made a decision not to receive standardized test scores – New York Times


I Got Lucky!


About 30 years ago, during a tight labor market, I ran an ad for a receptionist and got only one reply.  She was a homely looking 27-year-old that was taking night classes at a religious college that I reluctantly hired for my brokerage firm.  A couple of months later David, a college kid who was the son of a good friend, and a runner, picked up our mail at the post office and began with some other young fellows in the office, looking at my Playboy magazine in front of the receptionist.  She told one of her instructors, who told her she had grounds for a sexual harassment case against my company.  After I received the paperwork from her attorney, things began to be rather quiet in the office, so I dismissed her.  That was followed by a retaliation lawsuit from her attorney.  About a month later, David attended a bachelor’s party at a strip club for a friend, who was getting married and who was there?.….my ex-receptionist, who was at a table with a black fellow.  The next day David brought in a picture of the couple to the office and that was the last I ever heard from her or her attorney. – Buzz


This material does not necessarily represent the views of the presenting party, nor their affiliates.  This information has been derived from sources believed to be accurate.  Please note – investing involves risk, and past performance is no guarantee of future results.  The publisher is not engaged in rendering legal, accounting or other professional services.  If assistance is needed, the reader is advised to engage the services of a competent professional.  This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.  This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.  This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested.  All economic and performance data is historical and not indicative of future results.  Market indices discussed are unmanaged.  Investors cannot invest in unmanaged indices. 


"I work with many of the companies that would be RedChip companies. And we certainly ascribe to the same view that the RedChip Companies do, which is Discovering Tomorrow's Blue Chips Today."

  • Bob McCooey, Senior Vice President, NASDAQ Stock Market