MidSouth Week in Review
May 20, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

For the week, the S&P declined 3.1%, its seventh consecutive week of declines.  A growing number of economists and banks are warning that the economy could be heading toward a recession next year.  The retail S&P index (XRT) declined 13% over the past three days and is down 34% for the year.  Many retailers reported earnings and sales that were below expectations.  The yields on the 5, 10 and 30 year Treasury bonds all had drops below 3% during the week.  Crude rose from a mid-April low of 93 to 116 this week.  Sources:  Wall Street Journal and New York Times

BuzzBits

Heavy Weight – The S&P is a cap-weighted index.  Currently the 43 largest stocks in the index carry the same weight as the other 457 stocks in the index.  The S&P represents 83% of the entire market capitalization – S&P ….. Eight companies (Apple, Microsoft, Amazon, Alphabet, Tesla, Nvidia, Netflix and Facebook) are responsible for half the S&P decline this year – Wall Street Journal

Bumper Sticker – spotted on a Manhattan taxi:  Horn broken, watch for finger – Playboy

Warren Buffett – recently used the stock market slump to load up on stocks for his Berkshire Hathaway fund.  Buffett, an adherent of value investing has long advised that investors “be greedy when others are fearful” – Wall Street Journal

Divorce – has doubled since the 1990s for those 50 years+ and the debt burden shouldered by those over 70 has increased more than 500% from 1999 to 2019 – Capital Investment Advisors

The Stock Market – always does what it has to do to make the majority wrong – George A. Chestnutt, Jr.

Student Debt – 10% of borrowers owe $80,000 or more.  23% of the balance is held by borrowers who are age 50 or older.  More than half of students who receive bachelor’s degrees at public and private schools graduate with debt.  For most students, a degree still pays off.  The median lifetime earnings of a worker with a bachelor’s degree is $2.8 million, versus $2 million for those with an associate’s degree and $1.6 million for those with a high school diploma – Kiplinger Letter

Option Investing – Individual investors made up 26% of total option activity in March vs. 30% earlier in the year.  The share of bullish call-option trades by individual investors has plunged to the lowest level since April 2020 – Wall Street Journal ….. I have never seen anyone make money buying options – Buzz

TikTok – is growing faster than its U.S. competition. The China-based app will overtake YouTube for time spent on its platform, according to market research company eMarketer.  Over 40% of GenZers, people between ages 10 and 25 or so, spend more than three hours per day on TikTok – Kiplinger Letter

Ouch! – A 65-year-old couple retiring this year can expect to pay an average $315,000 on healthcare expenses.  That is up 5% from the 2021 estimate of $300,000 and nearly double what it was 20 years ago – Fidelity Investments

Sub-Prime Borrowers – with limited or troubled credit histories are defaulting on credit cards, car loans and personal loans.  Delinquencies recently rose for the eighth consecutive month and car loans and personal loans hit an all-time high in February.  A problem is that half of the citizens are living paycheck to paycheck and items such as food, gas and rent are seeing their prices soar – Wall Street Journal

Old Moms – The median age of American women giving birth is now 30 vs. 27 in 1990 vs. 23 in 1940 …... 37% of women born in 1935 had four or more kids – Census Bureau

Social Security Raise – The roughly 70 million people – retirees, disabled people and others who rely on Social Security, could receive an 8.6% cost-of-living adjustment next year – Senior Citizen Leaflet

Screw Twitter – Since March 5, Elon Musk’s holdings of Tesla and Twitter have declined from $218 billion to $129 billion.  The current price earnings ratio of the two stocks is 96 for Tesla and 161 for Twitter – Jay Kumar ….. Last month Musk made an offer to buy Twitter (TWTR - $37.28) for $54.20 a share.

Migrants – 234,088 crossed the southern border in April vs. an average total monthly count of 133,000 in 2019 – Dan Gager

Gasoline – The average price is now $4.52 a gallon according to AAA.  The most expensive is Muro, CA in northern California, where the price has topped at $6.75, with some stations charging as high as $7.19 – The Daily Money …… JP Morgan sees prices hitting $6.20 by August as peak U.S. summer driving season begins - ZeroHedge

Robbery

From my cousin Joan in Kentucky – “First off, I’m ok ….. so don’t worry.  I’m a little shaken up from this afternoon.  I was robbed at the Kroger’s gas station in Fern Creek.  After my hands stopped trembling, I managed to call the police.  They showed up pretty quickly and calmed me down.  My money is all gone, not that I had much on me.  The police asked me if I knew who did it.  I said yes …. It was pump number 3”. - Buzz

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.