MidSouth Week in Review:
January 08, 2018

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The first week of the year has started off with a bang as the S & P 500 made new highs every day of the week.  The Dow went through the 25,000 mark, taking only 27 trading days to rise from 23,242 to 25,182 (+8.3%).  Today, the U.S. stock market hit its longest stretch without a 5% decline over any six-month period.  The previous record was nine decades ago in lasting 394 trading days.  The S & P has had 14 straight months of positive returns.  

The latest AAII investor sentiment survey, conducted on Jan. 3, indicates that 59.8% of polled investors are bullish on the market, meaning they expect prices will be higher in six months.  That’s the highest level in about seven years, since a reading of 63.3% on Dec. 23, 2010, and it is significantly above the 38.5% historical average.  Since a near-term bottom of 29.3% on Nov. 16, optimism has soared by 30.5 percentage points.  Much of the spike since November can be pegged to the passage of a tax-reform passage in the U.S., which cut corporate tax rates, among other changes seen as providing a tailwind to equity prices.

Oil prices rose to a 3-year high because of antigovernment protests in Iran and a blast of cold weather, raising concerns about supply disruptions.  On Tuesday it was colder in Panama City than in Anchorage. Crazy!  
http://newsandbusiness.rogersdigitalmedia.com.edgesuite.net/videos/13639244001/201612/2850/136392
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BuzzBits

S & P 500 – is up 378% from its 2008 bear market low, in realizing a 19.4% annualized return over the 9-year period.  The S & P has averaged a 10.1% annualized return over the past 50 years – BTN Research

Wealth – Any income that is at least $100 more a year than the income of one’s wife’s sister’s husband – H. L. Mencken

Percentage With a Negative Net Worth – 18-34 year olds (35%), 40 to 45 year olds (15%), 50 to 54 year olds (11%), 60 to 64 year olds (7%) ….. 66 million Americans have zero dollars saved for a rainy day fund and 63% don’t have enough money saved to cover an unexpected $500 expense without resorting to a credit card or a pawn shop.  At the same time, $70 billion a year is spent on lottery tickets, $120 billion on gambling and $400 billion betting on sports events – Institutional Investor 

MoviePass – For $9.95 a month you can see 365 movies a year through www.moviepass.com.  Under the MoviePass business model, theaters get paid full price for every admission.  People who sign up receive a membership card that functions like a debit card.  When members want to see a movie (no more than one a day) they use a MoviePass smartphone app to check in at the theater.  The app instantly transfers the price of a ticket to the membership card.  Members in turn use the card to pay for entry – New York Times

Deducting for SALT (state and local taxes) – has been capped at $10,000 annually.  The limits will most severely affect the high tax states of NY, NJ, CT, IL and RI who have lost more than $200 billion of adjusted gross income since 1992.  NY and NJ are considering dropping their proposed “millionaires tax”.  1% of the people in NJ pay about 42% of its tax base.  Of the seven states that grew the fastest, four have no income tax and the other three have low taxes – Wall Street Journal

Playboy – is considering closing their magazine after the death of its founder Hugh Hefner last year.  The mag loses $7 million annually and has scaled back to six issues annually after a brief experiment in which it ceased printing nude photos.  Circulation has declined to 500,000 copies from 5.6 million in 1975 – Wall Street Journal

In-Family Loans – Only about 57% of the amount loaned is ever repaid.  The average amount loaned is $5,022 of which $2,857 is repaid.  Despite the lack of repayment, only 26% of those surveyed said they would never lend to family members again – LendingTree 

Mortgage Debt – Under the new tax law, existing mortgages interest will continue to be tax deductible on a total of $1 million for the first and second home.  For new buyers, the limit is now $750,000 – Wall Street Journal

2. S. Postal Service –lost $2.7 billion over the past year.  One of its big losers is Parcel Select.  Amazon packages at its own warehouses and then injects them into the USPS near their destination for the last-mile trip to homes.  USPS charged a mere $2.02 per piece for the 2.8 billion packages shipped last year.  Both Fedex and UPS most likely said thanks USPS, we love you.  USPS lost $2.3 billion over the past 12 months on $69.6 billion in revenue vs. Fedex making $4.5 billion on $62 billion in revenue vs. UPS making $5.2 billion on $64 billion in revenue – Buzz

Private Schools – are lowering their tuition.  Enrollment for grades pre-K to 12, including parochial dropped 14% to 6.3 million in 2016 from 7.3 million in 2006.  Reasons for the decline include:  more affordable Catholic schools have closed; traditional public schools provide better options; families cut their budgets after the 2007 recession; and charters and other alternatives have expanded – Wall Street Journal

buzz@msifund.com

This 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. 

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