MidSouth Week in Review
May 21, 2021

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

It was a tough week.  Last week I bought 30 Bitcoins when the going rate was $59,000 vs. a low of $30,000 this week.  The Bitcoin crash was caused from an Elon Must tweet that Tesla would no longer be taking Bitcoin on auto trades and because of China’s tightening restrictions on cryptocurrency used by banks.  For the week, the S&P declined 0.4%, its second consecutive weekly decline.  After three consecutive weekly declines, the NASDAQ was up 0.3% for the week.  Jobless claims hit a pandemic low of 444,000 vs. 481,000 the previous week.  April housing starts declined 9.5%.  Gold hit $1900, its highest level since early January.  Credit card debt declined in March to $749 billion, $60 billion less than January 2020.  The Dollar dropped to as low as $89.50 vs. its March high of $93.50.  Fortunately the 30 Bitcoins I bought were physical ones that I bought to give to friends and not the cryptocurrency ones.  Sources:  Wall Street Journal and New York Times

BuzzBits

Wrong Sentiment – Stock market sentiment indicators are contrarian.  Unusually low optimism is typically followed by above-average returns.  Unusually high optimism is typically followed by below-average returns.  On 5/6/2020, 53% of those in an AAII survey were bearish.  Since then, the market is up 41%.  As of 4/7/2021, 57% of those surveyed were bullish.  The S&P is unchanged over the one month period – Buzz

Stock Selection – Now is the time to select stocks in the same way a porcupine makes love; very carefully! – Robert Dindal

Small Cap Value Stocks – outperform small-cap growth stocks when economic growth is above normal.  Over the past 20 years when the GDP had a 5%+ nominal growth, the value stocks outperformed the growth stocks 68% of the time and outperformed the growth section by an average 420 basis points – Royce Investment Partners

Covid Mortality Rate Increases – Male Blacks lost 3 years to 68.3, Hispanic males lost 2.4 years to 76.6, White males lost 0.8 years to 75.5.  Female Blacks lost 2.3 years to 75.8, Hispanic females lost 1.1 years to 83.3 and White females lost 0.7 years to 80.6 – CDC

Stock Trades – The average number of yearly trades per investor rose from 1.2 in February 2019 to 2.7 in February 2020 to 6.5 in February 2021 – Charles Schwab ….. Margin debt on the NYSE increased to $823 billion in March 2021 vs. $479 billion in March 2020 – Financial Industry Regulatory Authority

Immigrants – that were deported in April were only 2,962, the lowest on record vs. the 20,000 per month deporting during Trump’s first three years in office – The Washington Post

Ouch! – Long-term Treasuries maturing in at least 10 years fell 13.5% in the 1Q, for the worst quarterly performance for this asset group in 41 years – Bloomberg

Biden Tax Plans – Reduction in estate exemption to $3.5 million · limiting lifetime gifts to $1 million · limiting annual gifts to $10,000 per donee · a 2% wealth tax on wealth above $50 million – Hunter Yarbrough, CapWealth

Prisoners – Almost two-thirds of the more than 700,000 who are released from prisons and the 9 million released from jail each year are rearrested within three years of being freed – Darnell Ford

Home Borrowers – On average borrowers in March had a FICO score of 751 vs. 735 at the end of 2019.  Lenders are getting more selective and are requiring larger down payments – Kiplinger

Teen Traders – Fidelity is launching a new account for teens aged 13 to 17 to save, spend and invest their money.  The accounts will allow them to deposit cash, have a debit card and trade stocks and funds.

U.S. Birth Rate – declined 4% last year to 55.8 births per 1,000 women, a record low.  The U.S. has experienced a six-year downward stretch in births, averaging 2% fewer births per year – CDC

Music Industry – Surveys last summer found that 90% of independent music venues were in danger of closing for good and a third of museums.  In a survey by the Music Workers Alliance, 71% of musicians and DJ’s reported a loss of at least 75% - Harper’s

Crazy! – Since March there has been 121 home closings in Williamson County, a popular county adjacent to Nashville.  Of those 121 properties changing hands, only 14 were sold below the list price, 39 went for list price and 68 above list price – Richard Courtney

Aging – The number of people 65 and older outnumbered kids under age 5 for the first time in history.  Over the next two decades, the number of people over 65 will nearly double to 72 million or 1 in 5 and most 65-year-olds will live into their 90’s.  A 10-year old today has a 50% chance of living to 104 – AARP

College Endowment Performance – What is amazing is that no university schools performance was even close to the 10-year 14% return of the S&P 500 – Buzz  http://www.charlesskorina.com/new_skorina/wp-content/uploads/2021/05/Endowment-Returns-2020-Strange-Days.pdf

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