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Bill’s By The Number$

1. YTD PERFORMANCE – The total return of the S&P 500 for the first 4 months of 2017 (i.e., through 4/28/17) is +7.2%, north of its +3.5% average return for the first 4-months over the last 25 years (1992-2016). The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. THEIR FAVORITE OPTION – 34% of 1,019 Americans surveyed in early April 2017 picked real estate as the best long-term investment today. 26% selected stocks as their top long-term choice (source: Gallup).

3. SELL IN MAY? – In analyzing the S&P 500 since 1990, the 6-month periods ending on April 30th have beaten the 6-month periods ending on October 31st in 18 of 27 years, i.e., the 6-month periods that began on May 1st and November 1st from 1990 through and including 2016. The 6-month periods ending April 30th are up +638% (total return) vs. a +73% gain for the 6-month periods ending October 31st (source: BTN Research).

4. INFLATION RETURNS – Inflation (using the Consumer Price Index) has exceeded +2% on a year-over-year basis for 4 consecutive months through March 2017, the first time inflation has had such a streak since April 2012. The Fed’s annual inflation target is +2% (source: Department of Labor).

5. ABOVE THE MAX – Earnings up to $127,200 in 2017 are subject to payroll taxes. 90% of all earnings were subject to payroll taxes in 1983. Just 82% of all earnings are expected to be subject to payroll taxes in 2017. An estimated 79% of all earnings are projected to be subject to payroll taxes in 2027 (source: CBO).

6. LAST TWO DECADES – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) has increased +239% in size in the last 20 years to $39.4 trillion as of 12/31/16, equal to growth of +6.3% per year (source: Securities Industry and Financial Markets Association).

7. AFTER TAX REFORM – Following the 10/22/86 signing of the “Tax Reform Act of 1986,” the US economy grew by an average of +3.8% per year for the subsequent 3-years, i.e., 1987-88-89 (source: Department of Commerce).

8. GAMES THEY PLAY – The Congressional procedure of “reconciliation” (i.e., passage of a bill with a “simple majority” instead of a “three-fifths” majority) can be used only if the legislation has been “scored” to show that the bill will not increase the country’s deficit beyond 10 years. For this reason, past tax reform legislation has included tax changes that “expire” within a 10-year period of time (source: Congress).

9. AGING POPULATION – By 2030 (i.e., 13 years from now), the US could face a shortage of as many as 104,900 medical doctors, including 43,100 primary care physicians (source: Association of American Medical Colleges).

10. WHAT THEY WANT – Although 3 out of 4 American businesses (75.9%) would be interested in hiring a 2017 college graduate with an engineering degree, just 1 out of 20 college seniors (5.2%) are majoring in some form of engineering (source: National Association of Colleges and Employers).

11. FRANCE – The French economy is the 5th largest in the world. French voters will choose next Sunday 5/07/17 between Emmanuel Macron and Marine Le Pen. The winner’s 5-year term in office begins on Monday 5/15/17. Parliamentary voting (France’s Congress) takes place on 6/11/17 and 6/18/17 (source: BTN Research).

12. THE MAGIC OF COMPOUND INTEREST – $1 growing at 8% on a tax-deferred basis will accumulate to $10.06 over 30 years. $1 growing at 4% on a tax-deferred basis will accumulate to $3.24 over 30 years. Thus, achieving a return 2 times as great will produce a balance more than 3 times as large over 30 years. This mathematical calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: BTN Research).

13. NICE NEIGHBORHOOD – The zip code with the highest median home value ($6.2 million) in the United States is 94027 in Atherton, CA, home to many Silicon Valley executives (source: Money).

14. COMMON FOLK – Just 1 in every 8 adult workers (13%) has both a defined contribution 401(k) plan and a defined benefit pension plan. All 535 members of the House and the Senate (100%) have both a defined contribution 401(k) plan and a defined benefit pension plan (source: Center for Retirement Research).

15. FROM WAY DOWNTOWN – Stephen Curry has a career shooting average of 44% on just his 3-point attempts. Pete Maravich, NBA star who played just one season with the 3-point shot (1979-80), had a career shooting average of 44% on 14,025 shots from the field over his 10-year career (source: NBA).

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Bill’s By The Number$

1. TIGHT RANGE – Through last Friday 4/21/17, the S&P 500 has just 2 trading days YTD that produced at least a 1% total return gain or loss, compared with 30 on the same date in 2016. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. NOT THE BEST – The average US investor has produced an annualized rate of return over the last 30 years that is equal to just one-third of the average return produced by the S&P 500 over the same 3 decade time period due to bad timing on the part of the investor (e.g., investing at bull market tops or selling at bear market bottoms), diversifying with bonds, and the impact of fees (source: Dalbar).

3. SMALLER GROUP, BIGGER PIECE – People with disabilities make up 15% of the 72 million Americans who are Medicaid beneficiaries but they incur 40% of total Medicaid spending (source: Medicaid).

4. ONE LOW, ONE HIGH – Usually a low national unemployment rate is coupled with a higher inflation rate, i.e., more Americans working creates greater disposable income which leads to a higher demand for products which tends to move inflation upward. As of 4/30/07, the nation’s unemployment rate was 4.5% (considered low) and trailing 1-year inflation (using the Consumer Price Index) was +2.6% (considered high). As of 3/31/17, the nation’s unemployment rate was 4.5% and trailing 1-year inflation was +2.4% (source: Department of Labor).

5. FANCY DEGREE – 222 members of the 535 members of Congress (41%) hold law degrees including 55 of 100 senators (source: Congressional Research Service).

6. BETTER AFTER SEVEN YEARS – As of Friday 4/21/17, only 3 banks in the United States have failed YTD and required a bailout from the Federal Deposit Insurance Corporation (FDIC). As of 4/21/10, 50 banks had failed YTD. Just 5 banks failed during all of calendar year 2016 (source: FDIC).

7. MOSTLY SHORT-TERM BORROWING – Of the $1.83 trillion in bills, notes and bonds that the United States Treasury has issued YTD through Friday 4/21/17 (equal to $114 billion borrowed per week), only 9% of the debt is 10-year notes or 30 year bonds (source: Treasury Department).

8. FIVE THOUSAND A DAY – 1.7 million more Americans are employed as of 3/31/17 than were employed as of 3/31/16, an increase of +4,655 new jobs per day. There were 153.0 million employed Americans as of 3/31/17 compared to 151.3 million employed Americans as of 3/31/16 (source: Department of Labor).

9. NOT ENOUGH WORKERS – 73% of contractors surveyed in January 2017 said they had “a hard time filling salaried or hourly craft construction jobs” in 2016 (source: Associated General Contractors of America).

10. A LOT MORE RENTERS – As of the end of 2016, there were 118.6 million households in the United States, split 64/36 between homeowners (75.6 million) and renters (43.0 million). Since the end of 2011 (i.e., 5 years earlier), the number of homeowners (75.3 million as of 12/31/11) has increased by just +300,000 while the number of renters (38.8 million as of 12/31/11) has increased by +4.2 million (source: Census Bureau).

11. WHERE THE MONEY COMES FROM – Property taxes represent 31.3% of the total tax revenue collected by states, greater than the 23.3% of tax revenue collected from sales taxes and the 22.9% of tax revenue that comes from individual state income taxes (source: Tax Foundation).

12. START SAVING NOW – The average cost of tuition, fees, room and board during the 2016-2017 school year at an average 4-year public college was $20,090, up +4.6% per year over the last decade. If that same rate of inflation continues over the next decade, 1-year of college (at an average in-state public college) will cost $31,441 during the school year of 2026-2027 (source: College Board).

13. ONE BAD, ONE DISMAL – The “debt-to-economy” ratio for Greece is 167%, i.e., $326 billion of debt stated as a percentage of the $195 billion Greek economy. The “debt-to-economy” ratio for the USA is 105%, i.e., $19.846 trillion of debt stated as a percentage of the $18.8694 trillion American economy (source: Commerce Department).

14. A REALLY LONG LIFE – 13% of American workers (i.e., 1 out of 8) with total household income of at least $100,000 believe they will live to age 100 (source: Transamerica Retirement Survey).

15. BIG BUCKS – 23 of 30 major league baseball teams are worth at least $1 billion, led by a $3.7 billon valuation for the New York Yankees. The Chicago Cubs may be the defending World Series champs, but are just # 4 on the valuation list, worth an estimated $2.7 billion (source: Forbes).

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Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. AT THE END – The S&P 500 gained +8.3% (change of the raw index not counting the impact of reinvested dividends) over the final 6 months of the 5-year bull market that ended on 10/09/07. The S&P 500 gained +19.6% over the final 6 months of the 9 ½ year bull market that ended on 3/24/00. The S&P 500 gained +12.9% over the final month of the 9 ½ year bull market that ended on 3/24/00. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. BEARS FOLLOW BULLS – The average decline for the S&P 500 during the 11 bear markets that have taken place since the end of World War II is 34% (source: BTN Research).

3. HARDER TO CATCH UP – A 30-year old employee that invests $500 at the beginning of every month in a tax-deferred 401(k) account will accumulate $588,032 by age 60 if the funds grow at +7% per year. If that individual was forced to suspend his/her monthly deferral for just 5 years from ages 35-39, he/she would have to earn +8.8% per year from ages 40-60 in order to accumulate $588,032 by age 60. This mathematical calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: BTN Research).

4. HALFWAY THROUGH THE YEAR – The USA’s budget deficit for the first 6 months of fiscal year 2017 (i.e., the 6 months ending 3/31/17) was $527 billion (source: Treasury Department).

5. TAX DATA – The top one-tenth of 1% of US taxpayers (based upon adjusted gross income) paid more federal income tax ($273 billion) during tax year 2014 (the latest year that tax information has been released) than the federal income tax paid ($182 billion) by the bottom 75% of taxpayers, i.e., the top taxpayer out of 1,000 average taxpayers pays more in federal income tax than the bottom 750 taxpayers (source: Internal Revenue Service).

6. DOLLAR CUT-OFFS – For tax year 2014 (the latest year that tax data has been released), it took $465,626 of adjusted gross income (AGI) to rank in the top 1% of taxpayers, $188,996 of AGI to rank in the top 5%, $133,445 of AGI to rank in the top 10%, and $77,714 of AGI to rank in the top 25% (source: IRS).

7. JOBS, JOBS, JOBS – Each one-tenth of one percentage point increase in our GDP (e.g., 2% growth to 2.1%) due to a rise in manufactured goods translates into +80,000 new American jobs (source: Commerce Department).

8. PUT IT ON THE CARD – Credit card debt in the USA was $1.00036 trillion (i.e., $1 trillion, $360 million) as of February 2017, the highest level nationwide since January 2009 (source: Federal Reserve).

9. COLLEGE DEBT BUBBLE – Of the 44 million Americans that have accumulated $1.31 trillion of student loans, just 16% (of the 44 million) have at least $50,000 of debt each but collectively this group has incurred 56% of the $1.31 trillion of student debt (source: New York Federal Reserve).

10. HIGH AND LOW – Of metropolitan areas with populations of at least 1 million, Salt Lake City (3.0%) has the lowest unemployment rate nationwide while Cleveland (6.6%) has the highest (source: Department of Labor).

11. PROCRASTINATORS – Congressional action that was taken on 12/09/16 avoided our nation’s 13th government shutdown since 1980. The agreement bought Congress 20 additional weeks, i.e., to midnight on Friday 4/28/17. Congress started a 2-week recess on Friday 4/07/17 and will not return until Monday 4/24/17, giving lawmakers just 5 days to agree on fiscal year 2017 spending levels (source: Congress).

12. OWE ZERO – 2 of every 5 homeowners (41%) between the ages of 65-74 and 3 of every 5 homeowners (63%) at least age 75 own their home free and clear of debt (source: Center for Retirement Research at Boston College).

13. RETIRE HERE – Social Security benefits are taxed by just 13 US states, i.e., 37 states do not count monthly Social Security benefits as taxable income at the state level (source: Internal Revenue Service).

14. PLEASE STAY – Connecticut lawmakers are considering a state bill that would provide a state income tax credit that averages $1,200 to students who stay in the state to work following their graduation from a Connecticut college with an associate’s, bachelor’s, master’s or doctoral degree after January 2018 (source: Hartford Courant).

15. HE FINALLY DID IT – Sergio Garcia, 37-year old Spaniard, had played in 73 professional golf majors before winning the Masters on Sunday 4/09/17. Garcia had 22 previous top-10 finishes in golf’s majors before beating Britain’s Justin Rose in a sudden death playoff following their tie after 72 holes (source: BTN Research).

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Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. STOCKS – The S&P 500 gained +6.1% (total return) in the 1Q 2017, the 5th best opening quarter for the stock index over the last 25 years, i.e., 1993-2017. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. TIME FLIES – The S&P 500 bull market that began on 3/09/09 is now in its 98th month. The average bull market for the stock index since 1950 (including the current bull) has lasted 61 months (source: BTN Research).

3. WOO PIG SOOIE – In data tracked since 1976 (i.e., 41 years ago), the February 2017 unemployment rates in Arkansas (3.7%) and Oregon (4.0%) are the lowest ever reported (source: Department of Labor).

4. WHAT’S IMPORTANT – 54% of 4,200 American workers surveyed would switch jobs for a better retirement plan (source: Transamerica Center for Retirement Studies).

5. NO PROGRESS MADE – After adjusting numerical data from the past for the impact of inflation, the median household income today ($56,516) is lower than the median household income ($57,909) from 1999 (source: Federal Reserve Bank of St. Louis).

6. BUT WOULD YOU UNDERSTAND IT? – The federal tax code and accompanying federal tax regulations contain 10 million words, a publication that would take an individual reading 300 words a minute (the average reading speed for an adult) more than 23 days of non-stop reading to digest (source: Tax Foundation).

7. YOU BORROW, YOU PAY – 94.7% of home mortgages are “current and performing” as of 12/31/16. Just 2.3% of home mortgages were “seriously delinquent” (defined as 60 days or more past due) as of 12/31/16 (source: Office of the Comptroller of the Currency).

8. THE REWARD – 30% of American homeowners who are approaching retirement move. Surprisingly, of the 30% that move, a greater number of homeowners buy a more expensive home compared to the number of homeowners who elect to downsize in retirement (source: Calvo, Haverstick and Zhivan).

9. NOT UP TO SNUFF – The 75-year (1942-2016) average growth rate of the US economy (i.e., “Gross Domestic Product” annual growth rate) is +3.3% per year. However, the actual growth rate of the US economy has reached +3.3% or greater in only 2 of the last 16 calendar years (source: Commerce Department).

10. BANKING BUSINESS – Just 4 banks in the USA hold 89% of all derivatives nationwide as of the end of 2016. The face amount of the derivative contracts held by all insured commercial banks and savings associations was $165.2 trillion as of 12/31/16. 75% of the $165.2 trillion were interest rate derivative contracts (source: Office of the Comptroller of the Currency).

11. REMOVES AN INCENTIVE FOR BANKS TO LEND – The +1% that the Federal Reserve currently pays to banks on the $2.185 trillion of excess reserves the banks hold at the 12 regional Fed banks (as of 3/29/17) is equal to $59.9 million in daily interest. The Fed began paying ¼ of 1% on excess reserves as of 10/06/08, increased the rate paid to ½ of 1% as of 12/17/15, increased again to ¾ of 1% as of 12/15/16, and finally to +1% as of 3/16/17 (source: Federal Reserve).

12. AWASH IN OIL – The storage of crude oil in the United States reached 535.5 million barrels as of Friday 3/31/17, an all-time record volume for our country. The 535.5 million barrels, up +56.5 million barrels YTD, are separate from any oil stored in the “Strategic Petroleum Reserve” which has a capacity of 727 million barrels (source: Department of Energy).

13. HAS TO TRAVEL A LONG WAYS – Oil pumped in Saudi Arabia and exported to the USA takes 90 days to reach America. Saudi Arabia is the # 2 country that the USA imports petroleum products from, trailing only Canada (source: Energy Information Administration).

14. PERSONALIZED MEDICINE – 10 years ago, it cost $10 million and took several weeks to “sequence a genome,” i.e., mapping out a person’s entire genetic code. Today, the work can be completed for $1,000 in just a few hours (source: Financial Times).

15. HOOPS – North Carolina beat Gonzaga on 4/03/17 for the championship of men’s college basketball. The game was held before 76,168 fans at the University of Phoenix Stadium in Arizona, more than the 75,765 fans that attended college football’s Alabama vs. Clemson title game held in the same arena on 1/11/16 (source: NCAA).

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Bill’s By The Number$

1. EIGHT YEARS OF GAINS – The ongoing bull market for the S&P 500 reached 8 years in length as of the close of trading on Thursday 3/09/17. Over the 8 years, the index has gained +314.4% (total return), an average annual return of +19.4%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. NO BIG DAILY DROP – As of the close of trading last Friday (3/10/17), the S&P 500 has gone 103 consecutive trading days without suffering at least a 1% decline over any single trading day. That’s the longest stretch the stock index has gone without a 1% drop since it had a run of 105 trading days without a 1% tumble that ended on 12/15/95 or more than 21 years ago (source: BTN Research).

3. DON’T WORRY ABOUT IT – Legislation signed into law by President Barack Obama on 11/02/15 (i.e., more than 16 months ago) suspended any debt ceiling limit until 3/15/17, i.e., Wednesday of this week. Our national debt was $18.5 trillion on 11/02/15. Our national debt was $19.9 trillion last week (source: Treasury Department).

4. AND BORROW WE DO – The yield on the 10-year Treasury note closed at 2.58% on Friday 3/10/17. The yield on the 10-year Treasury note closed at 4.59% on 3/10/07. Thus for the same annual cost of money, our government can borrow +78% more money today than we did 10 years ago (source: BTN Research).

5. DISCRETIONARY VS. MANDATORY – Over the next decade (fiscal years 2018-2027), estimated discretionary spending by the US government will total $13 trillion, an amount that is dwarfed by the government’s $34 trillion of projected mandatory spending (source: Office of Management and Budget).

6. A LOT IN A FEW – Less than 2% of the banks and savings institutions in the United States hold 82% of the deposits maintained in FDIC-insured institutions nationwide as of 12/31/16. There are a total of 5,913 banks and savings institutions holding $16.8 trillion of deposits as of the end of last year (source: FDIC).

7. US AND THEM – China has a target of +6.5% for economic growth during calendar year 2017. The United States has achieved year-over-year growth of at least +6.5% just once in the last 50 years, i.e., growth of +7.3% during calendar year 1984 (source: National People’s Congress).

8. GAP IN COVERAGE – House Republicans released the “American Health Care Act” (AHCA) last Monday (3/06/17), their replacement of the March 2010 Affordable Care Act. The bill includes language that allows health insurers to impose a +30% price increase on individuals who go uninsured for at least 63 days and then buy coverage only after they become sick, a provision known as “continuous coverage” (source: AHCA).

9. BIG CHANGE – The AHCA would change the funding of Medicaid as of 1/01/2020 from the current open-ended federal matching structure to a single block grant provided to the states by Uncle Sam (source: AHCA).

10. TAKES BOTH COMPONENTS – GDP growth of +3% per year, a goal of the Trump White House, could be achieved with +2% productivity growth (output per hour per worker) combined with +1% labor force growth (source: Department of Labor).

11. DEFENSE – The Budget Control Act of 2011 (signed on 8/02/11) set a cap of $549 billion for fiscal year 2018 defense spending, a total that President Trump wants to boost to $603 billion. The annual spending cap does not include “war spending” which is exempt from the 2011 legislation (source: Congressional Research Service).

12. LAND OF LINCOLN – Illinois, a state considering an income tax increase, has $12 billion of unpaid bills owed to vendors that provide services to the state (source: State of Illinois Comptroller).

13. PAPER OR PLASTIC? – Total credit card debt in the United States dropped in January 2017 to $995 billion, the first month-over-month decrease since February 2016. The peak in credit card debt nationally was $1.022 trillion in April 2008 (source: Federal Reserve).

14. IT WAS NO BIG DEAL – Today (3/13/17) is the 1,400th trading day since S&P downgraded the USA from a top credit rating on Friday 8/05/11. The yield on the 10-year Treasury note closed at 2.57% on 8/05/11. The yield on the 10-year Treasury note closed last Friday (3/10/17) at 2.58% (source: BTN Research).

15. FASTEST EVER – University of Washington wide receiver John Ross ran an electronically timed 4.22 seconds for the 40-yard dash at the 2017 NFL Combine, the fastest ever run. The NFL Combine has used electronic timing since 2000 (source: CBS Sports).

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Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. DOUBLE-DOUBLE IN EIGHT YEARS – In the first 2-years following its 3/09/09 bear market closing low of 677, the S&P 500 gained +102% through 3/09/11 (i.e., total return result including the impact of reinvested dividends). In years 3-8 (i.e., the next 6 years) from 3/09/11 to last Friday 3/03/17), the S&P 500 stock index has gained an additional +107%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. BAD CALL – The S&P 500 bottomed at 677 on 3/09/09, the end of a 17-month bear market in which the stock index fell 57%. A weekly survey of stock investors indicated 70% of them were bearish as of 3/04/09, the highest bearish measurement ever recorded by this study (source: American Association of Individual Investors).

3. GOOD CALL – The morning after closing at a bear market low of 677 on Monday 3/09/09, John Authers, journalist from the Financial Times newspaper wrote that “perhaps the greatest reason for hope (for the US stock market) at present is that almost all hope seems to have been lost.” At the time of Authers’ forecast, the S&P 500 had fallen 57% over the previous 17 months (source: Financial Times).

4. DOWN JUST A FEW DAYS – The S&P 500 was up +5.9% YTD (total return) through Tuesday 2/28/17. The stock index had just 4 down trading days in February 2017, the fewest number of down days for the S&P 500 in any single month since May 1990 or nearly 27 years ago (source: BTN Research).

5. ONE STOCK – The # 1 performing stock in the S&P 500 YTD through 2/28/17 (up +55.3%) was ranked # 462 (out of 500 total stocks) for all of calendar year 2016 while losing 16.5% last year (source: BTN Research).

6. ALMOST TWENTY TRILLION – The national debt of the United States is reported 5 days a week and is calculated to the penny. The national debt first exceeded $19 trillion on 1/29/16 and subsequently passed $19.9 trillion on 11/22/16. Outstanding debt peaked at $19.977 trillion on 12/30/16 (the last business day of 2016) and closed last Thursday 3/02/17 at $19.895 trillion but has yet to exceed $20 trillion (source: Treasury Department).

7. LONG TIME – The USA has kept records on economic expansions and contractions since 1854. The current expansion, which began in July 2009, is in its 93rd month. It is the 3rd longest expansion in history, trailing only expansions that ran from 1991-2001 and from 1961-69 (source: National Bureau of Economic Research).

8. VERY RICH PLAN – Defined benefit pension plans can be funded to produce an annual benefit at retirement as high as $215,000 in 2017, up from $180,000 in 2007 (source: Internal Revenue Service).

9. BORROWING EVERY WEEK – Through the first 2 months of 2017 (i.e., through 2/28/17), the Treasury Department has conducted weekly auctions in which they have borrowed $1.09 trillion. The duration of the debt ranges from as short as 4 weeks to as long as 30 years (source: Treasury Department).

10. PARTICIPATION – If the USA had 5 unemployed people for every 100 individuals either working or seeking work, the nation’s unemployment rate would be 5%, i.e., 5 divided by 100. People who have given up looking for work are not counted in the unemployment calculation. Counting 1 additional person who is no longer looking for work, the new math would be 6 divided by 101, resulting in a 5.9% unemployment rate (source: BTN Research).

11. COLLEGE COSTS – The cost of tuition, fees, room and board at an average in-state public college has increased +5.5% per year over the last 30 years, reaching $20,090 for the 2016-2017 school year. If college costs had instead risen only by the rate of inflation (using the CPI) over the last 30 years (+2.7% per year), then a year of college would cost $8,892 during the current school year (source: College Board, Department of Labor).

12. JUST WHAT YOU THOUGHT – 69% of 2,088 adults surveyed in December 2016 believe their “financial life” is “what they expected” or “better than expected,” i.e., 31% of adults believe the quality of their “financial life” is worse than what they had expected (source: National Endowment for Financial Education).

13. MAESTRO – Former Fed Chairman Alan Greenspan turns 91 years old today (3/06/17). Greenspan was the Fed’s Chairman for 18 ½ years beginning 8/11/87 through 1/31/06 (source: Federal Reserve).

14. HELP – 118,463 Americans are listed on the national transplant waiting list. 22 Americans die each day before receiving the life-saving transplant that they require (source: Department of Health and Human Services).

15. BACK-TO-BACK – The 2000 New York Yankees baseball team was the last major league team to repeat as World Series champs, a feat the Chicago Cubs will try duplicate in 2017 (source: MLB).

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. ABOVE AVERAGE – The S&P 500 has gained an average of +1.6% (total return) during the 1st quarter over the last 25 years (1992-2016). The index is up +6.1% YTD through last Friday 2/24/17. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. DEPENDS – An individual with $1 million invested 100% in the S&P 500 as of 1/01/73 withdrawing an inflation-adjusted $100,000 per year would be out of money in 9 years. A second individual with $1 million invested in the S&P 500 as of 1/01/82 withdrawing an inflation-adjusted $100,000 per year would have $4.46 million remaining after 35 years, i.e., as of 12/31/16. This calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: BTN Research).

3. U.S. DEBT HOLDERS – The Federal Reserve owned more Treasury securities at the end of 2016 ($2.46 trillion) than Japan ($1.09 trillion) and China ($1.06 trillion) combined (source: Treasury Department).

4. BORROW TO LIVE – Aggregate household debt in the United States reached $12.58 trillion as of 12/31/16, just $100 billion below our all-time peak debt total of $12.68 trillion as of 9/30/2008 (source: Federal Reserve).

5. IN THE RED IN FEBRUARY – The last time that the month of February did not produce the largest monthly deficit in any fiscal year was 2002 (i.e., the 12-month period from 10/01/01 to 9/30/02) or 15 years ago (source: Treasury Department).

6. NOT WORRIED – 51% of 1,205 working adults (between the ages of 45-65) who were surveyed in January 2017 have retirement savings of at least $100,000, but another 27% have saved nothing (source: Ipsos).

7. TICK, TOCK – A child born to a couple in February 1995 (22 years ago) who started college in the fall of 2013 is now scheduled to graduate from an average 4-year public in-state college in May 2017. If the child’s parents had invested $130 per month beginning at the child’s 1995 birth and had earned an annualized +8% on all invested dollars, the parents would have been able to pay for their child’s 4-year college costs of tuition, fees, room and board (the 4-year cost was $76,974). This calculation ignores the ultimate impact of taxes on the investment account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: College Board).

8. DO I REALLY NEED IT? – Only 36% of all jobs in the United States require education beyond high school, i.e., 64% of American jobs require a high school diploma or less. 27% of jobs do not require any formal educational credential (source: Department of Labor).

9. GREAT FOR FIRST-TIME BUYERS – Home buyers that borrow money from FHA-insured lenders may be eligible for a minimum down payment of just 3.5%, and most of the home buyer’s closing costs and fees may be included in the loan. Borrowers are required to purchase mortgage insurance which protects the lender in the event the borrower defaults (source: Federal Housing Administration).

10. TIGHT CREDIT – If the same credit standards used by lenders in 2001 were used during the 6 years of 2009-14 (i.e., following the 2008 global financial crisis), an additional 5.2 million mortgage loans would have been made, including 1.2 million mortgage loans in 2014 alone (source: Housing Finance Policy Center at the Urban Institute).

11. REAL ESTATE – Home prices have appreciated +16.6% over the last 5 years (12/31/11 to 12/31/16) in the New England states, half the +33.1% growth experienced nationwide (source: Federal Housing Finance Agency).

12. HIGH, LOW AND AVERAGE – The national unemployment rate as of 12/31/16 was 4.5%. Ames, IA (2.1%) had the lowest unemployment rate while El Centro, CA (18.8%) had the highest (source: Department of Labor).

13. ONE CHOICE – 32% of the 3,144 counties in the United States have just one health insurance option available through the federal insurance exchange or through their state-run exchange (source: Kaiser Family Foundation).

14. CROSS YOUR FINGERS – 28% of our nation’s 612,079 bridges are at least 50 years old and have never received any major reconstruction work (source: American Road and Transportation Builders Association).

15. NICE PUTT – Canadian professional golfer Adam Hadwin, famous for his score of 59 in the 3rd round of a PGA tourney in California on 1/21/17, went a span of 314 holes (i.e., equivalent to more than 17 consecutive rounds) during the 2016 season without incurring a 3-putt (source: PGA).

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Bill’s By The Number$

1. HISTORICAL PERSPECTIVE – Since 1950, there have been 58 different 10-year periods (i.e., the 10-years from 1950-59, 1951-60, 1952-61 . . . , 2007-2016). The S&P 500 index produced an average annual total return of less than +7% during 15 of the 58 decade-long periods (26% of the time). 19 of the 58 periods (33% of the time) resulted in an average annual total return of at least +14%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. KEEP GOING – The bull market for the S&P 500 will reach 8 years in length as of Thursday 3/09/17. Through last Friday 2/10/17, the S&P 500 has gained +305% (total return) during its bull run (source: BTN Research).

3. A LOT MORE SPENDING – Outlays of the US government are projected to grow +65% over the next decade (i.e., FY 2017 to FY 2027). Mandatory outlays are projected to grow +73%, discretionary outlays are projected to grow just +22% while interest costs are projected to grow +184% (source: Congressional Budget Office).

4. YOU DO THE MATH – The 4.8% unemployment rate for January 2017 that was reported by the government on 2/03/17 is based upon a survey of 60,000 households that was completed during the week of 1/08/17. The employment status of the individuals in those 60,000 households is then extrapolated to project national figures for our country’s actual 118.6 million households (source: Department of Labor).

5. TAKES TIME – From President Ronald Reagan’s State of the Union challenge on 1/25/84 “to simplify the entire tax code so all taxpayers are treated more fairly,” it took 2 ¾ years until the Tax Reform Act of 1986 was signed into law by Reagan on 10/22/86 (source: New York Times).

6. SHORT-TERM – 37% of Treasury debt at the end of FY 2016 (9/30/16) had a maturity of 2 years or less, i.e., debt that will mature by 9/30/18 and will either have to be rolled over or paid off (source: Treasury Department).

7. NOT QUITE FREE TRADE – The United States exported more goods and services in calendar year 2016 to the United Kingdom and Japan ($119 billion of combined exports) than we exported to China ($116 billion). The population of China (1.39 billion people) is 7 times the size of the 192 million individuals living in the United Kingdom and Japan combined (source: Department of Commerce).

8. WOULD THEY HOLD UP? – The Federal Reserve will conduct a “stress test” on 34 of the largest financial institutions and report their findings by 6/30/17. The financial modeling will analyze how the firms would respond if GDP fell 6.5% by the 2nd quarter 2018, stock prices fell 50% by the end of 2017, unemployment rises to 10% during 2018 and housing prices fell 25% (source: Federal Reserve).

9. ABOVE THE MAX – Earnings up to $127,200 in 2017 are subject to employee-paid payroll taxes of 6.2% that support Social Security benefits. An estimated 6% of American workers will make more than $127,200 in 2017 (source: Social Security Administration).

10. MAKE A LOT, PAY A LOT – The top 10% of US taxpayers (based upon 2014 tax data) reported adjusted gross income (AGI) of at least $133,445, received 47% of the AGI reported in the United States and paid 71% of all federal income taxes collected in 2014 (source: Internal Revenue Service).

11. ON TRACK – More than 3 of every 5 adults surveyed (62%) are either “very confident” or “somewhat confident” that their saving and investing habits will allow them to retire with a “comfortable lifestyle.” 4,200 American adults were surveyed for this report (source: Transamerica Center for Retirement Studies).

12. FRUITS AND VEGETABLES – 78.1% of “hired crop workers” on farms in the United States are foreign-born individuals (source: Center for Disease Control).

13. LOVE THOSE GRANDKIDS – The 81% of grandparents that provided cash gifts to their grandchildren over the past year gave an average of $2,383 not counting non-cash gifts such as child care or transportation (source: TD Ameritrade).

14. DON’T KNOW THE MEANING – 38% of 1,011 adults surveyed could not select the correct definition of a health insurance deductible (source: UnitedHealthcare).

15. SPRING IS IN THE AIR – Training camps for major league baseball teams open this week. The minimum salary for a major league baseball player for 2017 is $535,000. To rank in the top 1% of all US taxpayers (based upon 2014 tax data) required an adjusted gross income level of at least $465,626 (source: MLB).

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Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. BETTER JANUARY – The S&P 500 index gained +1.9% (total return) in January 2017, breaking a streak of 3 consecutive Januarys that had produced a total return loss. Despite the slow start, the S&P 500 has gained +29.0% (total return) over the last 3 years (2014-15-16). The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. UPS AND DOWNS – The S&P 500 has gained +10.2% per year (total return) over the last 50 years (1967-2016) in spite of suffering through 8 bear markets of at least a 20% decline each time (source: BTN Research).

3. GOOD START – 66% of the individual stocks in the S&P 500 (328 in total) were up in January 2017, including 40 stocks that were up at least +10% and 4 stocks that gained at least +25% (source: BTN Research).

4. RENTERS SOAR – The 109.6 million households in the United States on 12/31/06 were split between 75.4 million owners and 34.2 million renters. The 118.6 million households in the United States on 12/31/16 were split between 75.6 million owners and 43.0 million renters (source: Census Bureau).

5. NOT AS GOOD AS WE THOUGHT – 54% of student loan borrowers have either defaulted or failed to pay down even $1 of principal on their outstanding debt over the last 7 years. Until an error was discovered in government calculations in January 2017, it was believed that just 34% of borrowers had either defaulted or had not reduced their debt in the last 7 years (source: Education Department).

6. MADE IN AMERICA – 43% of 2,000 adults surveyed believe that “free trade agreements” that the United States has negotiated with its trading partners have “helped their family finances” by positively impacting the jobs held by family members or by enhancing the consumer purchases made by the family (source: Pew Research Center).

7. BETTER OFF THAN MOM AND DAD – In 2014, 51% of 30-year old Americans earned more than their parents, i.e., comparing the 2014 before-tax income of children born in 1984 with that of their parents when they were 30 years old after adjusting the parents’ income for the impact of inflation. In 1970, 92% of 30-year old Americans earned more than their parents (source: Trends in Absolute Income Mobility Since 1940).

8. SHOULD BE MORE – 77% of 4,200 Americans surveyed are saving for their retirement, either through a pre-tax retirement plan or through personal after-tax accounts (source: Transamerica Center for Retirement Studies).

9. MILITARY READINESS – The size of the US Army today is at its smallest level since World War II. The size of the US Navy is at its smallest level since World War I. The average age of an Air Force plane is 27 years. The Air Force has a shortage of 700 pilots (source: The Heritage Foundation).

10. REFUGEES – The United States admitted 84,995 refugees into the country during fiscal year 2016 (i.e., the 12 months ending 9/30/16). The top 3 countries from where the refugees originated last year: the Democratic Republic of the Congo (16,370), Syria (12,587) and Burma (12,347) (source: Pew Research).

11. TOO MUCH DEBT – The International Monetary Fund (IMF) is projecting in its annual review of member economies that Greece’s “debt to GDP” ratio will increase to 170% by 2020 and to 275% by 2060. The IMF report states that Athens will require “substantial debt relief from its European creditors” (source: International Monetary Fund).

12. OUR DEBT – The USA’s national debt was 115% of the size of our economy at the end of fiscal year (FY) 1945 (end of World War II), but fell to 67% of the size of the economy within 10 years (i.e., end of FY 1955). Debt was 106% of the size of our economy as of 9/30/16, i.e., the end of FY 2016 (source: Congressional Budget Office).

13. OVER THE NEXT DECADE – The Congressional Budget Office (CBO) estimates that over the next 10 fiscal years (i.e., 2018-2027) the United States will take in $43.1 trillion of tax revenue but spend $52.5 trillion, i.e., a deficit of $9.4 trillion (source: CBO).

14. SUPER BET – Prior to yesterday’s Super Bowl # 51, the underdog had won just 16 of 50 games, but had won 6 of the last 9 games. The Atlanta Falcons were 3 point underdogs in yesterday’s game (source: BTN Research).

15. EIGHTEEN-YEAR WAIT – 13 of 32 NFL football teams have never won the Super Bowl, including the Atlanta Falcons, the underdog in yesterday’s Super Bowl # 51. Atlanta’s only other appearance in the championship game was Super Bowl # 33 (played 1/31/99), the last game of quarterback John Elway’s 16-year Hall of Fame career with Denver (source: BTN Research).

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Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. OBAMA’S EIGHT YEARS – The S&P 500 gained +216% (total return) during the 2 terms and 8 years of the Obama administration, an average annual gain of +15.5%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. FIRST QUARTER – Over the last 25 years (1992-2016), the S&P 500 has gained an average of +1.59% (total return) during the 1st quarter (January-February-March), a total that represents 17% of the index’s 25-year average annual return of +9.15%. 54% of the index’s overall gain has occurred during the 4th quarter (October-November-December) over the last 25 years (source: BTN Research).

3. OIL – The price of oil closed at $45.23 a barrel on 11/29/16, the day before OPEC agreed to its first production cut in 8 years. Now 2 months later, oil closed at $53.20 a barrel on Friday 1/27/17, up +18% (source: NYMEX).

4. DOUBLE-DOUBLE – The national debt increased +37% during Bill Clinton’s 8 years as US president, reaching $5.7 trillion as of 1/20/01. The national debt increased +86% during George W. Bush’s 8 years as US president, reaching $10.6 trillion as of 1/20/09. The national debt increased +88% during Barack Obama’s 8 years as US president, reaching $19.9 trillion as of 1/20/17 (source: Treasury Department).

5. THEY’RE CATCHING UP – China’s economy expanded by +6.7% in 2016, its smallest growth rate in 26 years (since 1990). The US economy grew by +1.6% in 2016. The US economy has grown by at least +6.7% just twice in the last 60 years, i.e., +6.9% in 1959 and +7.3% in 1984 (source: Commerce Department).

6. AMBITIOUS GOAL – On Monday 1/23/17 President Trump said that his administration will lead the effort to cut at least 75% of the business regulations imposed by government agencies (source: White House).

7. NOT AT THE CORPORATE LEVEL – Over 90% of American businesses are “pass-through” entities, i.e., the business income is reported on the business owner’s individual income tax return. “Pass-through” businesses include sole proprietorships, partnerships and S-Corporations (source: Tax Foundation).

8. VARIED OPINIONS – 19% of Americans were not financially impacted by our nation’s 2008 recession. Another 20% was negatively impacted by the downturn but have since fully recovered. The remaining 61% have either “somewhat recovered” (41%), “have not yet begun to recover” (13%) or “may never recover” (7%). 4,200 Americans were surveyed in April 2016 for this report (source: Transamerica Center for Retirement Studies).

9. OUTSIDERS – Just 5 of President Trump’s 15 Cabinet picks are politicians that previously won an election – Jeff Sessions (Alabama senator), Sonny Perdue (former Georgia governor), Rick Perry (former Texas governor), Ryan Zinke (House member from Montana) and Tom Price (House member from Georgia) (source: BTN Research).

10. THE FOUR LARGEST – 1 out of every 3 Americans (33%) lives in just 4 US states – California, Texas, Florida and New York. These 4 states were home to 107.5 million citizens at the end of 2016 out of our nation’s population of 323.1 million (source: Census Bureau).

11. TRADE WAR COMING? – 16% of US exports are sold to Mexico. 80% of Mexican exports are sold to the United States (source: Commerce Department).

12. SMALL NUMBER, BIG DOLLARS – National health care expenditures in the United States during calendar year 2016 were an estimated $3.4 trillion. Just 10% of Americans were the source of 65% of that total (source: Centers for Medicare and Medicaid Services, Kaiser Family Foundation).

13. CHEAPER TODAY – The average price of gasoline nationwide was $2.29 a gallon as of Friday 1/27/17. The average price of gasoline nationwide in 1967 (i.e., 50 years ago) was 33 cents. After adjusting for 50 years of inflation, the 33 cent price in 1967 is equivalent to $2.42 in 2017 dollars (source: AAA, Department of Labor).

14. SPENDING HABITS – Fiscal year 2017 spending for the US government is projected to be $4.015 trillion, split between $2.538 trillion of mandatory spending (e.g., Medicare, Medicaid and Social Security), $1.207 trillion in discretionary spending and $270 billion in net interest costs. There are 12 different categories that comprise the $1.207 trillion of discretionary spending, the largest being the $592 billion allocated to “Defense” spending, i.e., 49% of discretionary spending (source: CBO).

15. ONE SCHOOL – Lynn Swann (MVP in SB # 10) and Tom Brady (MVP in SB # 36, # 38 and # 49) both went to Serra High School in San Mateo, CA along with baseball home run king Barry Bonds (source: BTN Research).

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