MidSouth Week in Review
July 15, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Jul. 19, 2022 | RedChip Companies

The S&P declined 1.0% for the week.  The inflation rate rose 9.1% in June, the largest gain since 1981.  Single family home prices rose 19.4% in the 2Q.  Gold fell for the fifth straight week to below 1700.  Wholesale gas rose to $3.48 from last weeks low of $3.24 before declining to $3.15.  13 of the top 14 year-to-date performers in the S&P as of 6-30-22 are in the oil and gas business.  The Fed say they are looking at a 75-basis-point interest rate increase this month.  The S&P dividends rose to a record $140.6 billion vs. $123.4 billion last year.  The big six banks hiked their prime rates to 4.70%.  Sources:  Wall Street Journal and New York Times




Small Cap Value Stocks – have a current price earnings ratio of 12.3 vs. 17.7 for the S&P 500.  From 1970 through 2021, small-cap value stocks had an average annual return of 13.8% vs. 11.0% for the S&P – David Snowball, Mutual Fund Observer


Wiped Out – A few years ago when I had a small cap value hedge fund, I was down 55% one year during a bear market.  A Jewish female client called me and said, “Buzz, we are wiped out,” to which I replied “I am too.”  She then said, “But, you can afford it”!  The next year my fund was up 100%+ and my client recovered – Buzz


Inflation – being up 9.1% annualized in June was brutal but the July rate should decline to around 8.5% due to lower gasoline prices – Kiplinger Letter …. Wholesale inflation climbed 11.3% in June vs. last year – New York Times


After Dinner – at the White House, George Armistead turned to his wife and said, “Now I suppose we’ll have to have the Biden’s over to our house.”


Local Newspapers – are closing at the rate of two per week.  Since 2019, 360 have shut down and 25% have shut down since 2005 – Kiplinger Letter


The Euro – In 2009 one would have had to pay $1.59 for a Euro vs. this week when the conversion dropped to $1 = 1 Euro.  The Euro has lost more than 10% of its value this year vs. the Dollar – Buzz


Housing – Roughly 60,000 home-purchase agreements fell through in June, equal to 14.9% of loans that went under contract that month.  That’s the biggest percentage on record with the exception of March and April 2000 – Redfin


Equities – The top 1% of American households own 53.9% of equities vs. only 0.6% for the bottom 50% - Federal Reserve


Young People – 65% of adults 18 to 44 think they should save more money but avoid engaging with the subject because they find it too stressful.  59% cringe at the thought of checking their bank account balance – Barron’s


Public Schools – Today, 14.5% of students in Boston’s public schools are white vs. 57% in 1973 and the school system is about half the size it was then, down from 93,647.  There are currently only 48,951 students.  In NYC, only 14.7% of the  public school students are white – New York Times ….. 74% of Nashville public school student families live below the poverty line – The Tennessean


Social Security – could see a 10.5% cost-of-living raise next year if inflation remains hot – USA TODAY


Home Heating Prices – could soar this winter.  Events in Ukraine have shot natural-gas prices into more than doubling this year, resulting in diminished inventory this fall.  Prices will affect everyone, since natural gas is also burned to produce electricity – EBW Analytics


Utah – More than 82% of the state’s residents spend less than they make and 83% regularly save for retirement and 92% have a bank account vs. Arkansas where only 43% of residents pay credit card bills in full and just 37% have an emergency fund – FINRA


Walking – Studies have shown that walking at least 30 minutes per day is enough to reap significant physical and emotional benefits – Wall Street Journal


The Old Days – When teachers first unionized in Chicago in the 20th century, 97% were women, and they were paid little more than maids – New York Times


Big Taxes – California is looking to raise their top tax rate on earners making $2 million+ by 1.75% to 15.05%, giving California the highest rate in the country.  New York City at 14.8% would now be in second place – Wall Street Journal


Airline Travel Tips – Go early, always fly direct, fly as early in the day as possible, download the airlines app, think twice about cheap fares – Kristie Koerbel on Facebook


Car Loans – Consumers are paying a record amount to finance their cars, hitting an all-time record $686 monthly in June, which is up 13% vs. last year.  12.7% of new car buyers have monthly payments of $1,000+ - Wall Street Journal….. In June the average transaction price of a new car topped $48,000, up 13% vs. last year – Ann Carrns


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