MidSouth Week in Review
September 23, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The Fed rose interest rates by 0.75%, causing the S&P to decline 4.8% for the week.  Either a three quarter or a half-point hike are expected at the Nov. and Dec. Fed meetings.  Over the past nine trading days the S&P is down 10%.  A few weeks ago the yields on the 5, 10 and 30 year government bonds were all below 3%.  Today they rose from 3.66% to 4%.  The current yield on 2-year government bonds is 4.19%.  Gold declined to a 29-month low and  Bitcoin declined  to $18,632 today.  According to Freddie Mac, mortgage rates rose to 6.29% this week vs. 6.02% last week.  The Dollar rose to 112.37 today vs. 91.56 a year ago. Sources:  Wall Street Journal and New York Times

Value vs. Growth –  Assume a potential $10,000 was invested in the Russell 2000 Growth vs. Russell Value at the start of 1979.  The small growth index rose to $460,000 vs. $1.46 million for the small value – Bill Nasgovitz

Successful Investing – Learn from your mistakes.  The only way to avoid mistakes is not to invest, which is the biggest mistake of all.  The big difference between those who are successful and those who are not is that successful people learn from their mistakes and the mistakes of others – Sir John Templeton

60/40 Portfolio – was started in 1976 with a conservative portfolio of the S&P 500 (60%) and a bond index (40%).  This year the portfolio is currently down 14%, the worst on record – Cubic Analytics ….. The 10-year Treasury bonds are down 14.6% year-to-date, the worst on record going back to 1928 – Compound

Luxury Homes Sales – fell 28.1% year over year during the three months ending August 31.  The highest decline since 2012.  Non-luxury home sales fell 19.5% - Redfin

Record Heat – This summer was Europe’s hottest, with temperatures soaring to 109 in France, 104 in the UK, and 102 in Germany.  Fewer than 5% of these countries have air conditioning – Time

Flu Season- begins in October but peaks between December and February.  Doctors say they expect more cases than in the past two years and possibly as many cases as there were in prepandemic flu seasons – Wall Street Journal… The CDC estimates at least 80,000 Americans died of flu-related complications last winter, exceeding the 56,000 that occurred during the 2012-2013 flu season – MINNPOST

Electric Vehicles – Hertz plans to order 175,000 electric autos over the next five years.  G.M. said last year that their plans are to go fully electric by 2035 – Associated Press

A Prenuptial Agreement – limits the assets that change hands when a wealthy person and their not-so-wealthy spouse divorce.  “I’m seeing an increase in interest in prenup agreements among young couples who don’t necessarily have significant wealth.  They now simply like the idea of drawing clear boundary lines when it comes to their money”.– Kaylin Dillon, financial planner

It’s True – In April 1931 a woman named Jackey Mitchell, a 17-year-old minor leaguer, took the pitchers mound against the Yankees in an exhibition game in Chattanooga.  Mitchell struck out Babe Ruth in four pitches, then Lou Gehrig in three –‘A Live in Baseball’ by T.B. Morgan and David Faulkner

The Rich – are often careful spenders.  For example, 61% of wealthy people drive non-luxury car brands like Honda, Toyota and Ford – Experian Automotive

Life Expectancy – The life expectancy of native Americans plunged 6.6 years.  The virus hit them so hard because they tend to be poorer and sicker, yet health care is “often inaccessible to them” – The Atlantic

Pay Hikes – Many have reported wage or salary increases which are averaging 4% this year.  However, these increases don’t even come close to the rise in consumer prices from June 2021 to June 2022, which are averaging 9% - Bureau  of Labor Statistics

London Vacation – A London vacation is a good trip because the Pound has collapsed.  In 1980 the British Pound was $2.44 vs. $1.72 in 2014 vs. $1.41 in February 2021 vs. $1.11 today – Bloomberg

Ouch! – New football helmets are now going for $400 to $900.  Why?  Covid issues, kinks in the supply chain, transportation slowdowns and a lack of workers – New York Times

Fatal Crashes – Rural roads account for half of them even though only 19% of the population live there.  Only half of those killed were wearing seat belts – Governors Highway Safety Association

Home prices – The median home sale price in August was $370,000, down 6% from June – NBCNews… New sales fell 19.9% vs. a year earlier – The Week

Paper Money

Paper money developed in Europe in the following manner.  During the Middle Ages it was customary for wealthy families to store their gold, jewels, and coins in vaults kept in the cellars of goldsmiths’ shops.  The goldsmiths gave written receipts for all valuables received, and these articles could be redeemed with the receipts at any time.  Eventually the receipts themselves were being used as currency by those who didn’t want to take the trouble to go to the vault every time they needed money, and businesses throughout Europe began accepting them as readily as gold.  The practice gradually spread: paper money became a common form of legal tender, and its use contributed to the establishment of the banking system, which was in full swing by the sixteenth century.

The material was prepared by MidSouth Investment Management LLC, and 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.