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Bill’s By The Number$

1. HERE WE ARE – The S&P 500 is up +5.9% YTD (total return) through the close of trading last Friday 10/28/16. With 2 months and 1 day remaining in 2016 trading, the index is short of its +9.7% average annual performance over the last 50 years (1966-2015). 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. LONGEST EVER – The yield on the 10-year Treasury note closed last week (Friday 10/28/16) at 1.85%, the 190th consecutive trading day that the yield has closed below 2%, the longest stretch below 2% in the history of the nation. 10-year notes have been traded since 1790, i.e., 226 years of trading (source: Treasury Department).

3. UNLIKELY – The Federal Reserve has a 2-day meeting this week (November 1-2). The Fed has raised short-term rates between September 1st and a Presidential Election Day just 1 time in the last 40 years. That single rate hike was a bump of ¼ of 1% initiated by Alan Greenspan on 9/21/04 (source: Federal Reserve).

4. LONG-TERM – Austria issued sovereign debt with a 70-year maturity on 10/25/16. The 2 billion Euros of debt will mature in November 2086 and has a 1.50% annual coupon for the next 70 years (source: Financial Times).

5. SEEMS LIKE A DECADE AGO – Hillary Clinton announced her run for the White House on 4/12/15, 2 months before Donald Trump announced his presidential campaign on 6/16/15 (source: BTN Research).

6. START SAVING NOW – A child born in 2016 that begins kindergarten in the fall of 2021 would attend college between the years of 2034 and 2038. If that child attended an average public in-state 4-year college and if the annual price increases for public colleges experienced over the last 30 years (+5.5% per year) continued into the future, the aggregate 4-year cost of the child’s college education (including tuition, fees, room & board) would total $227,984 or $56,996 per year (source: College Board).

7. DISCIPLINED – 78% of Millennials follow a budget in managing their monthly spending. “Millennials” are adults aged 19-35 in 2016, i.e., individuals born from 1981-1997 (source: Chase).

8. AFFORDABLE? – Health insurance coverage available through the Federal exchange will show a +25% average price increase in 2017. The math is based upon the 2nd lowest cost “silver plan” offered by participating health insurance companies, the specific plan upon which federal tax credits are calculated (source: HHS).

9. SEVEN MILLION MORE RENTERS – The 111.4 million households in the United States on 9/30/09 were split between 75.3 million owners and 36.1 million renters. The 118.6 million households in the United States on 9/30/16 were split between 75.3 million owners and 43.3 million renters (source: Census Bureau).

10. THREE IN A ROW – India’s economy is forecasted to grow by +7.6% in calendar year 2017, a result that would make India the fastest growing major economy in the world for the 3rd straight year (source: IMF).

11. TAXES PAID – Federal estate and gift taxes collected during fiscal year 2016 (i.e., the 12 months that ended 9/30/16) were just $21.4 billion, less than two-thirds of 1% of the $3.267 trillion of tax receipts collected during the period. Total individual income taxes collected (1040s) were $1.546 trillion, its largest total ever and more than 5 times the size of the $300 billion of corporate taxes collected (source: Treasury Department).

12. NO DEGREE IN HAND – Just 32% of American adults at least age 25 graduated from college with at least a bachelor’s degree, i.e., 68% of American adults did not graduate from college (source: Census Bureau).

13. AT MY BEST – The average American borrower reaches the apex of his/her decision-making abilities with regard to fees and interest costs at age 53, i.e., the experience and knowledge acquired during your 30s and 40s is maximized at age 53 but then declines thereafter as cognitive abilities diminish in older Americans (source: Sumit Agarwal, Federal Reserve Bank of Chicago).

14. IT’S A NEW WORLD – The legalization of recreational marijuana is on the 11/08/16 ballot in 5 states (Arizona, California, Maine, Massachusetts and Nevada). Recreational marijuana usage is currently legal in 4 states (Colorado, Washington, Oregon and Alaska) plus the District of Columbia. If the 5 November ballots all pass, then 23% of US citizens would live in a state where recreational marijuana usage is legal (source: Tax Foundation).

15. MOST WINS – In the last 20 years (1996-2015), the major league baseball team with the best regular season record has won the World Series just 4 times – the 1998 and 2009 Yankees, and the 2007 and 2013 Boston Red Sox. The Chicago Cubs had the best regular season record in 2016, winning 103 games (source: MLB).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for information.

Past performance is not indicative of future results.

Bill’s By The Number$

1. NIFTY NOVEMBER – November has been the 4th best performing month for the S&P 500 since 1991. Over the last 25 years (1991-2015), the S&P 500 has gained an average total return of +1.38% during November. Over the entire period, 18 of 25 Novembers have been up. 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. CONTRARIAN THINKING – An equal investment at the end of 2015 in the 10 worst performing individual stocks within the S&P 500 from calendar year 2015 was up +36.3% YTD as of the close of trading last Friday 10/21/16. An equal investment at the end of 2015 in the 20 worst performing individual stocks within the S&P 500 from 2015 was up +28.9% YTD as of the close of trading last week (source: BTN Research).

3. WE’VE TIGHTENED OUR BELTS – For the 5 years 2003-07, total household liabilities in America increased by at least $1 trillion each year. When the global real estate crisis began 8 years ago, total household liabilities declined by $157 billion in 2008 (from 2007). Since the end of 2008 to the middle of 2016, total household liabilities have increased by just $453 billion (not per year but in total) over the 7 ½ year period (source: Federal Reserve).

4. HOME DEBT – The average loan-to-value ratio in the US housing market as of 6/30/08 was 55%, i.e., the average US home mortgage had 45% of equity behind it. The average loan-to-value ratio in the US housing market as of 6/30/16 was 43%, i.e., the average US home mortgage had 57% of equity behind it (source: Federal Reserve).

5. NO TAXES – 54.4% of the American taxpayers (50.4 million out of 92.7 million returns) that reported adjusted gross income less than $50,000 during tax year 2014 legally did not pay any federal income tax (source: Internal Revenue Service).

6. NOT A PENNY – 0.1% of the American taxpayers (443 out of 410,298 returns) that reported adjusted gross income of at least $1 million during tax year 2014 legally did not pay any federal income tax (source: Internal Revenue Service).

7. NATIONAL EXPENDITURES – 61% of the $3.854 trillion of total outlays for the US government during the recently completed fiscal year 2016 were in just 4 categories – Social Security ($916 billion), National Defense ($595 billion), Medicare (also $595 billion) and Net Interest Expense ($241 billion). Total outlays increased by +4.5% on a year-over-year basis, up $166 billion (source: Treasury Department).

8. DEFENSE DOLLARS – America’s spending on “National Defense” (stated as a percentage of total government outlays) has fallen from 43.2% in fiscal year 1966 to 15.5% in fiscal year 2016 (source: Treasury Department).

9. JUST FIVE SURPLUS YEARS – The budget deficit for the United States in fiscal year 2016 (i.e., the 12 months that ended 9/30/16) was $587 billion. The USA has run a budget deficit in 51 of the last 56 fiscal years, i.e., 1961-2016. The only surplus years were 1969, 1998, 1999, 2000 and 2001 (source: Treasury Department).

10. A SMALL RAISE – Beginning in 1975, adjustments to Social Security retirement benefits for the following year have been pegged to changes in the Consumer Price Index (CPI). Limited national inflation has resulted in no “cost-of-living adjustment” (COLA) to retirement benefits just 3 times since 1975, i.e., in 2010, 2011 and 2016. The COLA boost for 2017 was announced last Tuesday (10/18/16) at +0.3% (source: Social Security).

11. WORK IS OVERRATED – 68% of American workers receive “paid sick leave,” 73% receive “paid vacation” and 75% receive “paid holidays” (source: Department of Labor).

12. CHILDREN AT RISK – 4.1 million children under the age of 18 that were born in the United States live with a parent or parents who are unauthorized immigrants in America (source: Migration Policy Institute).

13. ESTATE TAXES – The federal estate tax exemption is estimated to increase from $5.45 million (per decedent) in 2016 to $5.5 million as of 1/01/17, i.e., a married couple would be able to shelter $11 million from federal estate and gift taxes. The IRS announcement of the new limit is expected this week (source: BTN Research).

14. MAJOR ILLNESSES – 4 chronic diseases (cancer, strokes, diabetes and heart disease) are the cause of 67% of deaths in America each year (source: National Council on Aging).

15. BASEBALL – Babe Ruth is the only player in MLB history to have pitched a shutout and slugged multi-homer games in the World Series, i.e., 2 or more HRs in a single game. Ruth threw a shutout for the Red Sox in the 1918 Series plus hit 4 multi-homer games over 10 World Series between 1915-1932 (source: ESPN).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. UP FOR THE YEAR – In spite of tumbling 20.5% on the single trading day of 10/19/87 (29 years ago this week), the S&P 500 gained +5.3% (total return) for the entire 1987 calendar year. 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 value (source: BTN Research).

2. LOOKING INTO THE FUTURE – 8 of 10 Wall Street equity strategists polled by Barron’s on 12/12/15 forecasted a year-end 2016 closing value for the S&P 500 between 2100 and 2200. The S&P 500 index closed last Friday (10/14/16) at 2133 (source: Barron’s).

3. LUMP-SUM NEEDED – A present value (PV) amount of $1.96 million in a pre-tax retirement account is required today to fund a future payment stream of 30 years of $100,000 annually (with a 2.5% increase for maintenance of purchasing power) assuming that a 6% rate of return (ROR) can be maintained into the future. If the ROR falls to 5%, the PV amount rises 13% to $2.21 million. If the ROR rises to 7%, the PV amount falls 11% to $1.75 million. These calculations do not account for the payment of federal income taxes which would be due as a result of withdrawals from any pre-tax retirement account (source: BTN Research).

4. ANNUAL DEFICIT AND NATIONAL DEBT – For fiscal year 2016 (the 12 months that ended 9/30/16) the United States had a $587 billion budget deficit. During fiscal year 2016, the United States increased its national debt by $1.423 trillion to $19.573 trillion (source: Treasury Department).

5. TOP AND BOTTOM – American families in the bottom 50% of pre-tax household income are expected to receive 17.7% of national income in 2017. American families in the top 1% of pre-tax household income are expected to receive 15.4% of national income in 2017 (source: Treasury Department).

6. TAX CHANGES – The Tax Reform Act of 1986 was enacted on 10/22/86, i.e., 30 years ago this week. The legislation, signed into law by Ronald Reagan, was the last time the US tax code underwent major simplification. The number of tax brackets was reduced from 15 to 3. The top marginal rate was lowered from 50% to 28% while the lowest marginal rate was increased from 0% to 15% (source: Tax Reform Act of 1986).

7. GROWING – The US economy has been growing for the last 87 months (i.e., no recession), an expansion exceeded in length only 3 times since 1900 (source: National Bureau of Economic Research).

8. BIG INCOME – Warren Buffett, the 3rd wealthiest person in the world (ranked behind only Bill Gates and Amancio Ortega), reported $11.6 million of adjusted gross income in 2015. Bill and Hillary Clinton reported $10.6 million of adjusted gross income in 2015 (source: Forbes).

9. A CHANCE TO START OVER – After peaking at 1.562 million in 2010, personal bankruptcies (either Chapter 7 or Chapter 13) are on pace to decline on a year-over-year basis for the 6th consecutive year in 2016. Through 9/30/16, just 593,000 Americans have filed for bankruptcy protection YTD (source: American Bankruptcy Institute).

10. SOME DAY – As of Friday 10/14/16, the bond market was priced to reflect a 7% chance of a Fed rate hike at its 11/02/16 meeting and a 69% chance of a rate hike at its 12/14/16 meeting (source: CME Group).

11. IT WAS NO BIG DEAL – Last Friday (10/14/16) was the 1,300th trading day since S&P downgraded the USA from a top credit rating on Friday 8/05/11 (source: BTN Research).

12. HOUSE PRICES – The average price of a single family home in the United States peaked in March 2007, bottomed in May 2011, and then rose back above its March 2007 average high price in November 2015 where it has stayed through July 2016 (latest data released). From its May 2011 low, home prices are up +32%. From its March 2007 previous high, home prices are up just +4% (source: Office of Federal Housing Enterprise Oversight).

13. NOT COMPLETELY ON OUR OWN – 24% of the petroleum consumed by the United States in 2015 (including crude oil, gasoline and diesel fuel) was imported from foreign countries. The 24% was the lowest import percentage since 1970 (source: Energy Information Administration).

14. KILLER STORMS – Hurricane Katrina (August 2005) killed 1,833 people. Hurricane Matthew (October 2016) killed 1,045 people (source: National Oceanic and Atmospheric Administration).

15. A LOT MORE MONEY TODAY – Kevin Chappell made $4.5 million on the PGA Tour this year in 27 starts, winning zero times. Arnold Palmer and Johnny Miller made a combined $4.6 million on the PGA Tour in their careers, winning 87 tournaments, including 9 Major championships (source: PGA).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. WHEN THE FED TALKS – The daily market gain of the S&P 500 on the 54 “Fed decision days” since 1/01/10 (+0.2554%) is more than 5 times the size of the daily market gain of the index since 1/01/10 (+0.0471%). This total return calculation covers trading of the stock index from 1/01/10 through Friday 10/07/16. 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. PENTHOUSE TO OUTHOUSE – The individual stock that was the # 1 performer within the S&P 500 in 2013 gained +298%. That same stock then dropped 7% in the following year, ranking # 430 of 500 stocks in 2014. The stock then bounced back last year and gained +134%, rising all the way to be the # 1 performing stock again in 2015 within the index. Continuing the “up/down” pattern through the end of last month (9/30/16), this stock has lost 14% YTD, falling to # 458 of 500 stocks within the index so far in 2016 (source: BTN Research).

3. LONG LASTING BULL – The S&P 500 has been rising since the index bottomed on 3/09/09. This bull market began its 92nd month as of today (Monday 10/10/16). Only the 1990-2000 bull market that was into its 114th month before it peaked on 3/24/00 has lasted longer among the 11 bulls that have occurred in the last 70 years (source: BTN Research).

4. STUCK IN A RUT – The nation’s unemployment rate has been 4.9%, 5.0% or 5.1% in 13 of the last 14 months through September 2016 (source: Department of Labor).

5. MEDICAL LOSS RATIO – The Affordable Care Act (ACA) requires health insurance companies to spend at least 80% of the premiums they receive on health care services (e.g., doctors and hospital bills) and no more than 20% on administrative costs (e.g., sale commissions and advertising). If your monthly health insurance premium was $500 in 2015 and your health insurance company spent just 75% of premiums received on health care services (5% short of the required 80%), you were due a $300 refund by 9/30/16, i.e., $500 x 12 x 5% (source: ACA).

6. FOREIGN-BORN – 16% of the American labor force was born outside of the United States (source: The National Academies of Sciences, Engineering and Medicine).

7. ALL THE SAME – One political party has controlled the White House, the Senate and the House in 20 of the last 60 years, i.e., 1957-2016. E.g., Democrats controlled the White House (Obama), the Senate (58-40-2) and the House (257-178) in 2010, the last year that one political party controlled all 3 entities (source: BTN Research).

8. GETTING BETTER WITH AGE – Just 56.5% of Americans at least age 18 voted in the 2012 presidential election. For Americans aged 18-24, just 38.0% of them voted in the last presidential election. For older Americans who were at least age 65, 69.7% voted 4 years ago (source: Census Bureau).

9. THEY LOANED THE MONEY OUT – The $2.0615 trillion of excess reserves held by US banks at the 12 regional Federal Reserve banks as of 9/30/16 is down $482 billion in the last 12 months. Excess reserves are funds held that are above and beyond the federally mandated reserve requirement amounts (source: Federal Reserve).

10. MOST EVER – US retirement assets (DB plans, DC plans, IRAs) reached a record $24.5 trillion as of 6/30/16, up +76% from its $13.9 trillion total as of 12/31/08 (source: Investment Company Institute).

11. PAY IT OFF – 44% of US households had a credit card balance that they carried over month-to-month in 2007. By 2013, that percentage had fallen to 34% of households (source: Survey of Consumer Finances).

12. UP NINE TRILLION DOLLARS – The national debt on 1/20/09, the date that President Barack Obama was inaugurated following his November 2008 election, was $10.627 trillion. The national debt on 10/03/16, less than 4 months before his 8 years in the White House end, was $19.643 trillion (source: Treasury Department).

13. BIG COMMITMENT – 5 states (Illinois, New Jersey, Connecticut, Hawaii and Kentucky) have required annual payments to finance their states’ long-term liabilities (e.g., state employee pensions and debt service obligations) that exceed 25% of state revenues (source: Center for Retirement Research at Boston College).

14. CONCERNED ABOUT A BUBBLE? – As of 2/15/16, a purchase of a $1 million home in Canada requires a minimum down payment of 20% (source: Canadian Imperial Bank of Commerce).

15. MONEY BALL – The New York Yankees had the highest opening day payroll ($223 million) for the just completed 2016 season out of 30 baseball teams. The Cleveland Indians had the 27th highest opening day payroll ($74 million) this last season. The Indians made the playoffs while the Yankees did not (source: MLB).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. LAST QUARTER – Over the last 25 years (1991-2015), the S&P 500 index has gained an average of +5.1% (total return) over the final 3 months of the year (October-November-December). 20 of the last 25 fourth quarters (80%) have produced a positive total return gain. 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. YEAR-TO-DATE – The S&P 500 is up +7.8% YTD through Friday 9/30/16 on a total return basis. The index has had only 1 down year (2008) in the last 13 years, i.e., 2003-15 (source: BTN Research).

3. RISK/REWARD – 106 individual stocks in the S&P 500 (i.e., 106 of 500 stocks or 21% of the stocks in the index) gained at least +20% during the first 9 months of 2016 (change of the stock price without factoring in the impact of dividends) including 25 stocks that are up at least +40% YTD through 9/30/16. 161 stocks (32% of the stocks in the index) have dropped in value since the end of 2015 (source: BTN Research).

4. SAGE ADVICE – It was 8 years ago (10/16/08) that Warren Buffet wrote his “Buy America, I Am” op-ed article in the New York Times. Buffett encouraged investors to “be fearful when others are greedy, and be greedy when others are fearful.” Buffett’s letter was released less than 5 months before the stock market bottomed on 3/09/09, ending a 57% decline of the S&P 500 (source: New York Times).

5. MORE THAN A TRILLION A YEAR – The national debt as of 9/30/06 was $8.507 trillion. The national debt as of Thursday 9/29/16 was $19.533 trillion. Thus, the national debt has increased just over $11 trillion over the last 10 fiscal years, i.e., fiscal years 2007-2016 (source: Treasury Department).

6. NO PENSION – 72% of “Baby Boomers” do not have a corporate pension plan, a total of 56 million “boomers.” “Baby Boomers” are traditionally defined as the 78 million Americans ages 52-70 in 2016, i.e., individuals born from 1946 to 1964 (source: Insured Retirement Institute).

7. VOTE – 48 of the 50 states allocate their Electoral College votes on a “winner-take-all” basis, with only Nebraska and Maine allocating their states’ votes using a different methodology. There are 538 Electoral College votes nationally, thus requiring 270 votes to win the presidency. 538 is the total of 435 members of the House of Representatives, 100 Senators and 3 electors given to the District of Columbia (source: BTN Research).

8. IS THAT FAIR? – The 410,298 tax returns from tax year 2014 that reported at least $1 million of adjusted gross income (AGI) represent 0.28% of all returns filed (i.e., slightly more than ¼ of 1% of returns filed), received 14.0% of all AGI nationwide and paid 27.6% of all the federal income tax that was paid nationally in 2014 (source: IRS).

9. GOOD TV – 114.4 million Americans watched Super Bowl # 49 on 2/01/15 between the Patriots and the Seahawks, the most watched telecast in US history. 84 million Americans watched presidential debate # 1 on Monday 9/26/16 between Hillary Clinton and Donald Trump (source: Nielsen).

10. BROKE AGAIN – The agreement reached between Greece and its creditors on 5/25/16 called for 10.3 billion Euros to be paid to Athens to prevent yet another financial collapse – 7.5 billion Euros that was released in June 2016 and 2.8 billion Euros to be released in September 2016. However as of 9/23/16, Greece has achieved only 2 of the 15 financial requirements for the release of the 2.8 billion Euros (source: International Monetary Fund).

11. MORE MONEY – 9 of the 10 highest paying bachelor degrees by salary potential for college graduates in 2016 were engineering degrees, including Petroleum Engineering and Systems Engineering (source: PayScale.com).

12. LOUSY MATH – The California Public Employees’ Retirement System projected that the investments backing state employees’ pensions would grow from $159.1 billion in 1999 to $613.5 billion in 2016 due to an +8.25% annual rate of return plus yearly contributions. Actual fund size in 2016 was just $295.1 billion (source: CalPERS).

13. BLAME IT ON LOW OIL PRICES – Saudi Arabia is projecting a sovereign budget deficit in 2016 that will be equal to 13% of the size of the Saudi economy (source: Financial Times).

14. HERE AT HOME – At the depths of the global housing crisis that began in 2008, the United States had a budget deficit in fiscal year 2009 that was equal to 9.8% of the size of the American economy (source: OMB).

15. THE KING – Arnold Palmer won $184,065 during the 1967 PGA golf season (winning 4 times), his best earnings year ever on the links. Rory McIlroy won $11.53 million on 9/25/16 (the day of Palmer’s death) by winning the PGA Tour Championship in sudden death and clinching the season-long FedEx Cup (source: PGA).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. LONG TERM vs. SHORT-TERM – The all-time closing high for the S&P 500 was 2190 on 8/15/16. The average return for the index for the 5 years ending 8/15/16 was +15.2% per year (total return), half again as large as the +9.7% per year average for the index over the last 50 years (1966-2015). 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. BEFORE IT TURNED UP – Before beginning a bull market run in March 2009 that has produced annual gains of +19.2% (total return) over each of the last 7 ½ years, the S&P 500 closed at a bear market low of 677 on 3/09/09. The average return for the stock index for the 2 years ending 2/28/09 (just 9 days before the bottom in the stock market) was a loss of 26.1% per year on a total return basis (source: BTN Research).

3. BEFORE IT TURNED DOWN – Before beginning a 17-month long bear market tumble of 57% that started in October 2007, the S&P 500 closed at a bull market high of 1565 on 10/09/07. The average return for the index for the 5 years ending 9/30/07 (just 9 days before the peak in the stock market) was a gain of +15.5% per year on a total return basis (source: BTN Research).

4. POST-BREXIT – In the first 2 trading days following the 6/23/16 “Brexit” vote in the UK, the S&P 500 dropped 5.3% (total return). Since then, the S&P 500 has gained +8.8% (total return) through the close of stock trading as of last Friday 9/23/16, 3 months to the day following the referendum vote (source: BTN Research).

5. HUGE – The US stock market was worth $23.7 trillion as of 6/30/16. The S&P 500 made up 81% of the total US stock market capitalization as of 6/30/16, equal to $19.2 trillion (source: BTN Research).

6. BIGGER THAN HUGE – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $40.7 trillion as of 6/30/16. The US bond market was worth $12.4 trillion as of 12/31/96 (source: Securities Industry and Financial Markets Association).

7. DOUBLE-DOUBLE – Fiscal year 2017 (10/01/16 to 9/30/17) begins this Saturday. The US government is projecting outlays of $4.073 trillion for the upcoming 12 month period. Outlays have grown from $1 trillion in 1987 to $2 trillion in 2002 to a projected $4 trillion in 2017 (source: Office of Management and Budget).

8. NEED TO CHANGE THIS – The top marginal corporate tax rate in the United States is the 3rd highest in the world out of 188 countries. Only the United Arab Emirates (UAE) and Puerto Rico have a top marginal corporate tax rate that is higher than the USA’s (source: Tax Foundation).

9. EXPENSIVE TO LIVE – 11% of American homeowners spend at least 50% of their pre-tax income on their housing costs. 26% of American renters spend at least 50% of their pre-tax income on their housing costs (source: Joint Center for Housing Studies at Harvard University).

10. AT LEAST THAT MUCH – 24% of 1,000 pre-retirees surveyed in the first quarter 2016 believe they will need to accumulate at least $1 million in order to “live comfortably” during their retirement years, up from 15% in 2005 (source: Employee Benefit Research Institute Retirement Confidence Survey).

11. BLUE – If Hillary Clinton wins the November 2016 presidential election, Democrats will occupy the White House for at least 12 consecutive years. That would be the longest stretch in the White House for the Democrats since FDR and Harry Truman led the country for the 20 consecutive years of 1933-1952 (source: BTN Research).

12. RED – If Donald Trump wins the November 2016 presidential election, he will become just the 4th president in history to be elected to the nation’s highest office without any prior political experience. The other 3 – Zachary Taylor, Ulysses S. Grant and Dwight Eisenhower – all had high level military experience (source: BTN Research).

13. ONE PERCENTER – It took at least $465,626 of adjusted gross income during tax year 2014 (i.e., the most recent year that tax data has been collected) to rank in the top 1% of wage earners (source: Internal Revenue Service).

14. WE WILL SEE – Federal Open Market Committee (FOMC) data that was released following their 9/21/16 meeting indicates the Fed expects that its target rate for short-term interest rates will be 1.5 percentage points higher by 12/31/18, i.e., suggesting 6 separate increases of ¼ of 1 percentage point each (source: FOMC).

15. SPORTS FAMINE – The Seattle Mariners are 2 games out of the American League wildcard spot as of games played through Thursday night 9/22/16. The Mariners’ post season drought is the longest in baseball today, having last made the playoffs in 2001 (source: Major League Baseball).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. YOU STILL MADE MONEY – The S&P 500 peaked on 10/09/07 before beginning a 17-month bear market that saw the raw index fall 57% before bottoming on 3/09/09. An investment in the S&P 500 on 10/09/07 (i.e., at the market’s top and before the fall) is up +66.1% (total return) as of the close of trading on Friday 9/16/16 (i.e., nearly 9 years later), an annualized return of +5.8% per year. The S&P 500 consists of 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. NICE GAIN – 2015’s +5.2% rise in household median income is the largest year-over-year increase ever recorded (2015’s median income over 2014’s median income). The household income statistic has been tracked nationally since 1967 and is adjusted for inflation (source: Census Bureau).

3. NOT THE MOST – Household median income in the USA was $56,516 in 2015. The highest level of household median income recorded was $57,909 in 1999, a total that has been adjusted for inflation (source: Census Bureau).

4. THEY EXTRAPOLATE – The government surveyed 95,000 American households to compile the “household income” statistic, or less than 0.1% of the nation’s 118.3 million households (source: Census Bureau).

5. HAVING BABIES – The birth rate in the United States is 13.42, i.e., 13.42 births per 1,000 citizens. The birth rate in Mexico is 19.02, i.e., 19.02 births per 1,000 citizens, or +42% higher than that of the United States (source: CIA World Factbook).

6. TAX DATA – The 6.22 million tax returns from 2014 that reported at least $200,000 of adjusted gross income (AGI) represent 4.2% of all returns filed, received 34.2% of all AGI nationwide and paid 58.2% of all the federal income tax that was paid nationally in 2014 (source: Internal Revenue Service).

7. RISING PRICES – Over the 5 years 1977-1981, inflation (as measured by the Consumer Price Index) advanced by +61.5%, an increase of +10.1% per year. Since then, only 1 calendar year (1990) has produced annual inflation of at least +5%. Over the 12 months ending 8/31/16, inflation advanced +1.1% (source: Department of Labor).

8. MORE THAN TEN BILLION A DAY – With less than 2 weeks remaining in fiscal year 2016 (i.e., the 12 months that will end on 9/30/16), the government is projecting fiscal year spending of $3.88 trillion, equal to $10.6 billion of daily outlays (source: Treasury Department).

9. COST OF DOING BUSINESS – Based upon June 2016 data, 69% of the total employee cost that an employer pays in the private sector is for wages and salaries. The other 31% is for the various benefits that are legally required (e.g., Social Security) or are simply provided to attract and retain workers including insurance, retirement plans and paid leave (source: Department of Labor).

10. FED ACTION – When the Fed raised short-term interest rates on 12/16/15, their post-meeting press conference included a forecast of 4 rate hikes in 2016 that would result in a one percentage point increase, i.e., 4 hikes spread over 8 scheduled meetings of ¼ of 1 percentage point each. Through the first 5 meetings of 2016, the Fed has not raised rates. Meeting # 6 of 2016 will take place this week (source: Federal Reserve).

11. THEY DIDN’T AGREE – This week’s Fed meeting is the 21st of the Janet Yellen era. Yellen became the Fed chair on 2/03/14. There have been 13 dissents to her interest rate recommendations from her first 20 meetings, cast by just 5 different members of the Federal Open Market Committee (source: Federal Reserve).

12. NOT UNTOUCHABLE – When a 1983 Social Security committee (chaired by Alan Greenspan) implemented changes that gradually increased the age from 65 to 67 at which a retiree would receive full social security benefits, only Americans that were 20 or more years from turning 65 were impacted (source: Social Security).

13. EARN LESS, PAY IN MORE – The trustees of the Illinois Teachers’ Retirement System (TRS) pension plan voted to reduce the plan’s discount rate from 7.5% to 7% on Friday 8/26/16. This action will force the pension plan to increase its annual plan contribution by $421 million to $4.3 billion a year (source: TRS).

14. BEIJING FLYING – Increased airline travel in China is projected to require +100,000 additional pilots over the next 2 decades, an average of nearly 100 new pilots a week for the next 20 years (source: BusinessWeek).

15. ARE YOU READY FOR FOOTBALL? – 35% of the NFL football players on the opening day rosters for 2016 graduated from high schools in just 3 states – Florida, California and Texas. Only 2 states (Alaska and Maine) do not have a player on a NFL roster this season (source: MaxPreps).

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Bill’s By The Number$

1. HIGH AND LOW – 45% of the tax returns filed in tax year 2014 reported adjusted gross income (AGI) less than $30,000. 4% of the tax returns filed reported AGI of at least $200,000 (source: Internal Revenue Service).

2. SOME PAID, SOME DID NOT – Americans filed 148.6 million tax returns in tax year 2014. 65% of the returns (96.5 million) paid federal income tax while 35% of the returns (52.1 million) did not pay any federal income tax (source: Internal Revenue Service).

3. DOLLARS IN, DOLLARS OUT – Chicago has more retired policemen and survivors of policemen than they have active police officers. As of 12/31/15, Chicago had 12,061 working policemen but had 12,528 retired officers and survivors of deceased officers (source: Policemen’s Annuity and Benefit Fund of Chicago).

4. OUT OF BUSINESS – Lehman Brothers, a 158-year old company, was forced to file for bankruptcy protection on 9/15/08 (8 years ago) when no “white knight” emerged to rescue the company from its substantial investment in subprime mortgages. It was (and still is) the largest US bankruptcy ever. Since Lehman Brothers’ 2008 filing, central banks around the world have cut interest rates 670 times (source: JPMorgan).

5. AFFORDABLE HEALTH CARE COVERAGE – 12.7 million Americans enrolled through their state health insurance marketplace or through the federal health insurance marketplace during the 2016 enrollment period, i.e., the 3 months of 11/01/15 through 1/31/16. As of 6/30/16, 11.1 million (of the 12.7 million) were current with their monthly health insurance premium payments. Of the 11.1 million with active insurance coverage, 9.4 million are receiving a tax credit that averages $291 per month (source: Health and Human Services).

6. A SINGLE PERCENT – Total foreign aid spending by the USA in fiscal year 2016 (i.e., the 12 months that will end 9/30/16) is projected to be $38.8 billion or 1% of our government’s projected spending of $3.951 trillion that is forecasted for the fiscal year that ends in less than 3 weeks (source: Office of Management and Budget).

7. LUMP-SUM NEEDED – A present value (PV) amount of $179,000 is required to fund a $1,000 per month payment for 20 years with a 3% annual increase for maintenance of purchasing power assuming that a +6% annual rate of return is maintained into the future. The PV amount is $237,000 if the required payment period is 30 years. The calculations ignore the impact of taxes and are for illustrative purposes only and are not intended to reflect any specific investment alternative (source: BTN Research).

8. WELCOME TO AMERICA – The United States will admit up to 85,000 refugees into our country during fiscal year 2016 (source: Immigration and Nationality Act, Section 207).

9. AGING POPULATION – 9 of the 12 fastest growing occupations expected in the upcoming decade are in the health care industry, including occupational therapists, physical therapists, home health aides, audiologists and nurse practitioners (source: Department of Labor).

10. SKILLS SHORTAGE? – The 5.871 million job openings nationwide as of 7/31/16 were the largest number ever reported by the government for a statistic tracked since December 2000. Just 3 years ago (7/31/13) there were just 3.689 million job openings in the country (source: DOL).

11. ON YOUR OWN – More than 1 in 3 employed Americans (36%) work for companies that do not offer an employer-sponsored retirement plan, a total of 55 million workers lacking access to a plan (source: AARP, DOL).

12. JUST TRYING TO HELP – 8 American states (California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Oregon and Washington) have passed legislation that created state-sponsored retirement plans for private sector workers. Another 20 states are considering legislation that would enact a similar plan (source: Pension Rights Center).

13. HE SAID NO – President Barack Obama has vetoed just 10 bills since taking office more than 7 ½ years ago. The 10 vetoes, none of which have been overridden, are the fewest by any president since Warren Harding (1921-23). President Ronald Reagan vetoed 78 bills during his 8 years in office (source: Senate).

14. WHEN IS YOUR BIRTHDAY? – With just 46 people in a room, there is a 95% chance that 2 people in the group have the same birthday (source: BTN Research).

15. PRIME TIME – Deion Sanders is the only athlete to have competed in both MLB’s World Series and the NFL’s Super Bowl. Sanders played in the 1992 World Series with the Atlanta Braves and in Super Bowl # 29 (played on 1/29/95) with the San Francisco 49ers (source: BTN Research).

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Bill’s By The Number$

1. NINE vs. THREE – In the last 25 years (1991-2015), the S&P 500 has gained more on a total return basis during the 4th quarter (i.e., the months of October-November-December) than the index has gained during the other 3 quarters combined. Over the last 25 years, the final 3 months of the year have gained +246.9% (total return) vs. a gain of +199.6% for the first 9 months of the year. 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 an accumulation of $4.26 million remaining after 34 years, i.e., as of 12/31/15. 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. MORE THAN TWO-THIRDS – The total return of the S&P 500 over the last 5 calendar years (2011-2015) is +80.7% (total return). The best 13 trading days during the 5 years (i.e., 13 days out of 1,258 total trading days) produced a +55.1% gain. Thus, 1% of the trading days over the last 5 years were responsible for 68% of the index’s total return (source: BTN Research).

4. BETTING ON LAST YEAR’S WORST – An equal investment taken at the end of the trading day on 12/31/15 in the 10 worst performing individual stocks within the S&P 500 from calendar year 2015 is up +40.2% YTD through 8/31/16 (source: BTN Research).

5. CHASING LAST YEAR’S WINNERS – An equal investment taken at the end of the trading day on 12/31/15 in the 10 best performing individual stocks within the S&P 500 from calendar year 2015 is down 2.3% YTD through 8/31/16 (source: BTN Research).

6. THE BEST DAYS – The 3 best percentage gain days for the S&P 500 in the last 66 years (i.e., dating back to 1950) all occurred during the month of October (source: BTN Research).

7. ONE OPTION – 36% of the “geographic rating areas” in the USA are projected to have just 1 health insurance company offering coverage through state health insurance exchanges in 2017 (source: Avalere Health).

8. MONEY COMING IN – Tax receipts for fiscal year 2016 (i.e., the 12 months that will end on 9/30/16) are projected to be 17.8% of the size of the US economy. Tax receipts (as a percentage of the economy) have exceeded 17.8% only 20 times in the last 85 years (source: Office of Management and Budget).

9. CONTRIBUTE MORE – The largest public pension fund in the United States (the California Public Employees’ Retirement System) voted in March 2012 to reduce its discount rate from 7.75% to 7.50%, a change that required the pension fund to contribute an extra $303 million a year. In November 2015, CalPERS announced plans to further reduce its discount rate to 6.50% over the next 3 decades (source: CalPERS).

10. ENOUGH? – Just 1 in 7 workers surveyed (14%) have accumulated retirement assets of at least $250,000 not counting the value of their primary residence or the present value of any pension plan they have (source: EBRI).

11. RARELY – The Fed has raised rates between September 1st and Election Day just 1 time in the last 40 years. That single rate hike was a bump of ¼ of 1% initiated by Alan Greenspan on 9/21/04 (source: Federal Reserve).

12. WHY SO LONG? – An individual stock trade “settles” in 3 business days, i.e., the stock buyer must deliver cash and the stock seller must deliver the securities within 3 business days. 1 year from today (9/05/17), an individual stock trade will “settle” in just 2 business days (source: Securities and Exchange Commission).

13. IN JUST ONE YEAR – The US government reported a national debt of $18.151 trillion as of 8/31/15. The US government reported a national debt of $19.510 trillion as of 8/31/16 (source: Treasury Department).

14. WEST COAST WATER – 21% of California is currently experiencing an “exceptional drought,” down from 46% a year ago. Drought conditions are measured on a continuum from “moderate” to “severe” to “extreme” to “exceptional” (source: U.S. Drought Monitor).

15. IN THE FAIRWAY TOO – PGA golfers have hit 8 drives of at least 400 yards during the 2016 season through Sunday 8/28/16. Justin Thomas has the season’s longest drive at 414 yards (source: PGA).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. VERY THIN RANGE – The S&P 500 has traded at least 1% higher or lower from the previous day’s close during just 1 trading day of the 35 trading days through Friday 8/26/16. But the index traded at least 1% up-or-down from the previous day’s close during 30 of the first 35 trading days of calendar year 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. IN A DECADE – Our national debt, $19.5 trillion today, is projected to reach $28.2 trillion as of the end of fiscal year 2026, i.e., 10 years from now (source: Congressional Budget Office).

3. UP BIG – Interest payments on our national debt are projected to nearly triple over the next 10 years, rising from $248 billion in fiscal year 2016 to $712 billion in fiscal year 2026 (source: Congressional Budget Office).

4. SENSITIVE – The “duration” of the 30-year T-bond as of 8/26/16 was 21.687 years, i.e., a 1 percentage point increase in the current yield of the long bond will reduce the value of the bond by 21.687% (source: Ryan ALM).

5. LAST QUARTER – The 3 months of October-November-December rank 2-4-3 in terms of average monthly performance for the S&P 500 index (i.e., October is 2nd best, November is 4th best and December is 3rd best). The 3 months have jointly gained + 5.1% per year (total return) over the last 25 years (1991-2015) or 52% of the index’s total return over the entire 25-year period (source: BTN Research).

6. GIT R DONE – Productivity of the average American worker (output per worker per hour) over 10-year stretches of time increased the greatest (+34%) from 1957-1966. Productivity of the average American worker had its weakest 10-year growth (+11%) from 1973-1982 (source: Department of Labor).

7. QUACK, QUACK – Between 6/30/15 and 6/30/16, average home prices increased in 49 of 50 US states. Oregon’s +11.7% average home price gain led the nation (source: Federal Housing Finance Agency).

8. BIG PIECE – Payroll taxes finance Social Security, Medicare and unemployment benefits. Projected payroll taxes during fiscal year 2016 (i.e., the 12 months ending 9/30/16) are $1.1 trillion, 33% of the total tax receipts ($3.3 trillion) forecasted for the full fiscal year (source: Office of Management and Budget).

9. NEED A LITTLE HELP – Just 6 life insurance companies have failed in the last 5 calendar years (2012-16) as of Friday 8/26/16 and were taken over by state insurance departments. A total of 105 banks have failed over the same time period and were taken over by the Federal Deposit Insurance Corporation (source: National Organization of Life & Health Insurance Guaranty Associations, FDIC).

10. LOWER OIL PRICES – 45 of the 79 American companies (57%) that have defaulted on corporate debt in the 12 months ending 6/30/16 represent companies in the energy and natural resources industries (source: S&P Global Fixed Income Research).

11. AT ODDS – The average growth of the US economy over the last 50 years (through 6/30/16) is +2.8% per quarter (i.e., quarter-over-quarter change expressed as an annualized result) but all quarters since October 2014 have reported less than +2.8% growth. The average monthly jobs gain over the last 50 years (through 7/31/16) is +134,000, but all months since October 2014 have reported an average of +221,000 new jobs (source: DOL).

12. COLLEGE AND CARS – The outstanding balance of student loans ($1.26 trillion) is larger than the outstanding balance of auto loans ($1.10 trillion) as of 6/30/16 (source: Federal Reserve Bank of New York).

13. MAKE MORE, PAY MORE – The effective federal tax rate for the top 1% of US taxpayers for 2016 is projected to be 33.0% of income, including federal income taxes, payroll taxes, excise taxes, estate taxes and gift taxes. The estimate does not include the payment of state income taxes. The effective federal tax rate for the bottom 20% of US taxpayers is projected to be just 3.5% of income (source: Tax Foundation).

14. FANNIE AND FREDDIE – Treasury Secretary Hank Paulson announced on 9/07/08 (i.e., 8 years ago) the government’s plan to take control of mortgage giants Fannie Mae and Freddie Mac. The Treasury Department initially pledged up to $200 billion of financial support in anticipation of future mortgage defaults. Fannie and Freddie actually received $187 billion of taxpayer aid, but have paid back $247 billion for a $60 billion profit for taxpayers, equal to a +3.5% annualized gain (source: Treasury Department).

15. LADIES RULE – The American Olympic team won 121 medals at the Rio Games, split between 61 medals won by US women, 55 medals won by US men and 5 medals in mixed-gender sports (source: BTN Research).

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