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Bill’s By The Number$

1. RANGE – The highest closing value YTD (2190 on 8/15/16) for the S&P 500 index is +19.7% higher than the lowest closing value YTD (1829 from 2/11/16) for the index. In the last 50 calendar years (1966-2015), the “high close” has been on average +27.9% greater than the “low close” during the course of the year. The smallest gap between the “high close” and the “low close” in the last 50 years was +9.8% in 1993. 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. AT THE BACK END – The highest closing value during the year for the S&P 500 stock index has occurred in the final 4 months of the year (i.e., September-October-November-December) in 10 of the last 13 calendar years (source: BTN Research).

3. BULL STATS – The ongoing bull market for the S&P 500 (now in its 90th month) has achieved 118 all-time closing highs, the most recent occurring last Monday 8/15/16 (source: BTN Research).

4. THE RISK – The average interest rate paid by the government on its interest bearing debt was 2.259% as of 7/31/16. The average interest rate paid by the government on its interest bearing debt was 4.382% as of 7/31/08 (8 years earlier) or 2% greater than today. Every 1% increase in the cost of debt on our nation’s $14 trillion of publicly held debt is equal to $140 billion per year in additional interest expense (source: Treasury Department).

5. FIRST TRILLION, LAST TRILLION – Our nation’s total outstanding debt as of 8/18/16 was $19.445 trillion. It has taken 293 calendar days (since 10/30/15) to add the latest $1 trillion of debt. It took our country 205 years (from 1776 to November, 1981) to accumulate our first $1 trillion of debt (source: Treasury Department).

6. THE TRUTH – In his July 1984 convention acceptance speech, Democratic nominee Walter Mondale said “Taxes will go up. It must be done.” Mondale lost 49 states in the 1984 election (source: BTN Research).

7. STRONGER REAL ESTATE MARKET – At the end of 2010, 8.2% of mortgages had at least 1-payment past due and another 4.6% of mortgages were in the foreclosure process. At the end of June 2016, 4.7% of mortgages were at least 1-payment past due and another 1.6% of mortgages were in the foreclosure process (source: Mortgage Bankers Association).

8. IMPACTED BY GLOBAL DEMAND – The field production of crude oil in the USA peaked at 9.61 million barrels a day in June 2015, but has fallen off by 1 million barrels since then to 8.60 million barrels a day as of Friday 8/12/16 (source: Department of Energy).

9. PRETTY SHORT-TERM – As of 9/30/16 (i.e., the end of fiscal year 2016), 66.5% of the outstanding debt of the US government will mature in 5 years or less (source: Treasury Department).

10. NOT AS FRUITFUL – Productivity of the average American worker has declined in each of the last 3 quarters through 6/30/16, the first time that has occurred since 12/31/79 (source: Labor Department).

11. GREEN ACRES – The average American “farm real estate value” is $3,010 an acre in 2016, including land and buildings, an increase of +4.5% per year over the last 4 years. The price of farmland averages $7,850 an acre in Iowa but just $1,880 an acre in Kansas (source: Department of Agriculture).

12. MORE AND MORE RENTERS – There were 118.3 million households in the United States as of 6/30/16, split 63/37 between “owners” (74.4 million households) and “renters” (43.9 million households). The “owner” number has been flat over the last 12 months. The “renter” number has increased by 1.0 million over the last 12 months (source: Census Bureau).

13. OVER TIME – 20 years ago (6/30/96), the split between “owners” and “renters” in the USA was 65/35. 10 years ago (6/30/06), the split between “owners” and “renters” was 69/31. Today (6/30/16), the split between “owners” and “renters” is 63/37 (source: Census Bureau).

14. PRICE CONTROL? – Health insurers participating in the New York health insurance exchange for 2017 submitted proposals that included average price increases of +19.3% over actual 2016 rates. The NY state insurance commissioner ultimately approved average rate hikes of +16.6% for 2017 (source: Wall Street Journal).

15. WAY AHEAD – American Olympic swimmer Katie Ledecky won gold in the 800-meter freestyle event on Friday 8/12/16, her 3rd individual gold medal and 4th gold overall (including a relay event) of the Rio Games. Ledecky has the 13 fastest times in the women’s 800-meter freestyle in history (source: BTN Research).

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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. NOT THE LONGEST – The longest bull market for the S&P 500 since 1950 lasted 3,452 calendar days, i.e., the 9 ½ years from 10/11/90 to 3/24/00. The current bull market for the S&P 500 is 2,713 calendar days long as of Friday 8/12/16, i.e., the approximate 7 ½ years from 3/09/09 to last Friday 8/12/16. The current bull would have to last until 8/22/18 (i.e., 2 more years from now) to reach 3,453 calendar days. 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. PLAN NOT WORKING – Citizens in Denmark, Switzerland and Sweden are saving a higher percentage of their income in 2016 than in any year since 1995. Ironically, all 3 countries are issuing government bonds that are subject to negative interest rates, a strategy designed to encourage borrowing and investing (source: OECD).

3. YOU CAN LEAVE WORK EARLY – An average American worker has increased his/her productivity by +99% in the last 40 years, i.e., an average worker can complete in 1 hour as of 6/30/16 the same amount of work that it took him/her 2 hours to finish as of 6/30/76 (source: Department of Labor).

4. CHANGES – Republican Presidential nominee Donald Trump proposed on Monday 8/08/16 a reduction of the top US corporate marginal tax rate from 35% to 15%. Trump also proposed a 10% one-time tax on the $2.3 trillion of profits parked in the overseas subsidiaries of American multinational firms (source: BTN Research).

5. VOTING – Presidential candidates have won the White House yet lost their home state only 2 times in the last 100 years; Richard Nixon (NY) in 1968 and Woodrow Wilson (NJ) in 1916 (source: presidentelect.us).

6. NOTHING PAID – Over the years 2006-2012, 67% of the C-corporations in the United States paid zero federal income tax in any of the 7 years. The C-corps legally were able to zero out their tax liability through numerous deductions and credits (source: Government Accountability Office).

7. SELLING GOODS AROUND THE WORLD – 59% of the revenues of the average technology company within the S&P 500 come from foreign sales (source: S&P Dow Jones Indices).

8. NOT ONE PENNY – 44% of the households in the United States headed by a currently employed individual (i.e., a “working” household) do not have any money invested on a pre-tax basis in a defined contribution plan, e.g., a 401(k) retirement plan (source: Government Accountability Office).

9. SUMMER ROAD TRIP – Of the 19.0 million barrels of petroleum products consumed on a daily basis by the United States, 52% of our usage (or 9.8 million barrels a day) corresponds to our nation’s daily gasoline consumption (source: Department of Energy).

10. JUST A NUMBERS GUY – Andreas Georgiou, the former head of Greece’s national statistical office, is facing up to 10 years in prison for inflating the country’s deficit. Georgiou’s 2010 work, which pegged his nation’s 2009 deficit at 15.8% of GDP, is accused by Greece’s supreme court of producing an exaggerated percentage that allowed Greece’s 3 main creditors (International Monetary Fund, European Central Bank, and the European Commission) to implement severe bailout terms in Greece’s 2010 rescue package (source: Financial Times).

11. MOSTLY DEBT – As of 12/31/15, 76% of the investment portfolios backing the future liabilities of the American life insurance industry were allocated to bond investments (source: S&P Global Market Intelligence).

12. REMOVE THE CAP – Earnings up to $118,500 in 2016 are subject to payroll taxes. An estimated $180 billion annually in additional payroll taxes would be collected over the next decade if the $118,500 cap was eliminated (source: Tax Foundation).

13. IMPACT OF LOWER RATES – The discount rate used to calculate the present value of pension liabilities has historically been benchmarked to high-quality corporate bond yields. Every 1 percentage point drop in the discount rate produces an approximate +12% increase in the present value of pension liabilities (source: Center for Retirement Research at Boston College).

14. GREENBACK POWER – 90% of all global trades, including transactions that do not involve an American buyer or seller, are conducted in US dollars (source: Morgan Stanley Investment Management).

15. DIALED IN BIG TIME – Jim Furyk’s round of 58 in the final day of play of the PGA golf tournament on Sunday 8/07/16 in Connecticut is the lowest round ever in a men’s PGA event. There have been 1.5 million rounds played in the history of the PGA dating back to 1929 (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. STOCKS AND POLITICS – In the last 50 years (1966-2015), the S&P 500 has been up +18.3% per year (total return) under a Democratic President and a Republican-led Congress, 4 times the +4.5% annual return achieved under a Republican President and a Congress controlled by the Democrats. The stock index gained +11.9% per year when the White House and Congress were controlled by the same political party. When the House and the Senate were controlled by different parties (regardless of which party is in the White House), the S&P 500 has been up +9.2% per 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. WHAT’S THE IMPACT? – The S&P 500 gained +11.0% per year (total return) over the 70+ years that the USA was top ranked by the credit rating agency Standard & Poor’s, i.e., the time period of 1941 through Friday 8/05/11. The S&P 500 gained +15.2% per year (total return) over the 5 years since the USA was downgraded by Standard & Poor’s on Friday 8/05/11, i.e., the time period 8/05/11 through Friday 8/05/16 (source: BTN Research).

3. WHAT HAVE YOU DONE FOR ME LATELY? – Of the 14 stocks in the S&P 500 index that gained at least +45% in calendar year 2015, 6 stocks have a negative return YTD through 7/31/16 (source: BTN Research).

4. 2016 COMEBACK – Of the 22 stocks in the S&P 500 index that fell at least 45% in calendar year 2015, 11 stocks have gained at least +20% YTD through 7/31/16 (source: BTN Research).

5. WRONG – JPMorgan Chase predicted in August 2011 that the yield on the 10-year Treasury note would increase by at least 0.6 percentage points over the “medium term” as a result of the 8/05/11 rating downgrade by Standard & Poor’s. The yield on the 10-year Treasury note was 2.57% as of the 8/05/11 downgrade. The yield on the 10-year Treasury note was 1.59% as of the close of trading on Friday 8/05/16 (source: JPMorgan Chase).

6. STARTED IN 1694 – The Bank of England cut its benchmark interest rate to 0.25% last Thursday (8/04/16), the lowest rate ever in its 322-year history and its first rate cut since March 2009. The move, widely expected since the 6/23/16 Brexit vote, is designed to stimulate the British economy by encouraging increased borrowing by corporations and consumers (source: Bank of England).

7. GUTSY MOVE – House of Representative member Reid Ribble (R-WI) has introduced legislation (“Save Our Social Security Act”) that over several years would increase the “full retirement age” for Social Security from 67 to 69. The last time the nation’s Social Security program underwent major reform was 1983. The changes implemented at that time included a rise in the retirement age in stages from 65 to 67. The chairman of the National Commission on Social Security Reform in 1983 was Alan Greenspan (source: Congress).

8. SPENDING – Americans spent $3.63 billion less at gas stations in June 2016 when compared to June 2015, but they spent $2.55 billion more at restaurants and bars in June 2016 than in June 2015 (source: Census Bureau).

9. ABOVE THE MAX – Earnings up to $118,500 in 2016 are subject to payroll taxes. 90% of earnings were subject to payroll taxes in 1983. Just 83% of earnings will be subject to payroll taxes in 2016 (source: Tax Foundation).

10. SEVEN YEARS AGO – There were 7.77 million out-of-work Americans as of 7/31/16. There were 14.60 million out-of-work Americans as of 7/31/09 (source: Department of Labor).

11. ALL THIS YEAR – The price of oil ended 2015 at $37.04 a barrel, fell 29% to $26.21 by 2/11/16, then rose +95% to $51.23 by 6/08/16, and now has fallen back 18% to close at $41.98 a barrel as of Friday 8/05/16 (source: Nymex).

12. IN THE BANK – As of 8/01/16, only 3 banks have failed YTD in the United States, the fewest number of bank failures as of August 1st in any calendar year since 2007 (source: Federal Deposit Insurance Corporation).

13. HE WON – The 2016 Presidential election is 3 months from today (11/08/16). In the 2012 election, Barack Obama won 51.1% of the popular vote, a total of 66 million votes (source: PresidentElect.us).

14. NOT ENOUGH INFLATION – The “consumer price index” (CPI) has reached at least +2% on a trailing 12-month basis in only 3 of the last 50 months, i.e., May 2012 through June 2016. The Federal Reserve’s target rate of annual inflation for the United States is +2% (source: Department of Labor).

15. BUCKEYE BULLET – 80 years ago tomorrow (8/09/36), American sprinter Jesse Owens won his 4th gold medal at the 1936 Olympics held in Berlin, Germany. Owens, an Ohio State athlete who went to high school in Cleveland, won gold in the 100 meters, 200 meters, long jump and the 4 x 100 meter relay (source: History.com).

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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. SINCE THE DOWNGRADE – Friday (8/05/16) is the 5-year anniversary since the United States was downgraded by S&P from a top credit rating on 8/05/11. Since 8/05/11, the yield on the US 10-year Treasury note has fallen from 2.57% to 1.45% and the S&P 500 has gained +101.8% on a total return basis. 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 IN THE STOCK MARKET – If you selected any single month at random to invest in the S&P 500 (at the close of the prior month) during the 25-years ending 6/30/16, you achieved a positive total return 65% of the time. If you extend your investment time horizon to just 1 year, you achieved a positive total return 81% of the time. If your time horizon was 2 years, you achieved a positive total return 80% of the time (source: BTN Research).

3. BEST THIS YEAR – The # 1 performing individual stock within the S&P 500 during the first 7 months of 2016 has gained +144.6%. That same stock lost 4.8% in 2015, ranking # 273 of 500 stocks (source: BTN Research).

4. BEST LAST YEAR – The # 1 performing individual stock within the S&P 500 during calendar year 2015 gained +134.4% last year. That same stock lost 20.2% in the first 7 months of 2016, ranking # 481 of 500 stocks so far this year (source: BTN Research).

5. WHO CARES? – The CBO predicted on 6/16/15 that “debt held by the public” would exceed the size of the US economy in 2039, a forecast that was revised on 7/12/16 to 2033 (source: Congressional Budget Office).

6. MORE OUT THAN IN – The trust fund backing Social Security retirement benefits took in payroll tax contributions that exceeded retirement benefit payments made to retirees for the 26 consecutive years of 1984-2009. Since 2010, benefits paid have exceeded payroll taxes collected. In 2015, covered workers paid in $679.5 billion of payroll taxes, but retirees received $742.9 billion of benefit payments (source: SS Trustees 2016 Report).

7. IMPACT OF BOOMERS – There are 2.8 workers (paying payroll taxes) for every one Social Security beneficiary in 2016, i.e., there are 36 Social Security beneficiaries for every 100 covered workers today. There will be an estimated 2.3 workers (paying payroll taxes) for every one Social Security beneficiary in 2030, i.e., there will be 44 Social Security beneficiaries for every 100 covered workers in 2030 (source: SS Trustees 2016 Report).

8. RISING GREENBACK – 8 years ago, the Euro peaked at $1.6038 (on 7/15/08). Last Friday (7/29/16), the Euro closed at $1.1175. A weaker Euro (i.e., stronger US dollar) has a negative impact on US exporters, a critical factor to many American companies since 46% of the revenues of the average S&P 500 company come from foreign sales (source: Standard & Poor’s).

9. OIL ACTIVITY COMEBACK – The operating oil rig count in the United States was 698 as of 12/31/15 and then fell for the first 20 weeks of 2016 (through 5/20/16) to bottom at 404. More recently the oil rig count has now increased each week for the last 5 consecutive weeks, finishing Friday 7/29/16 at 463 operating rigs (source: Baker Hughes).

10. RECORD LOW YIELDS – The just completed month of July 2016 had the lowest closing yield on the 10-year Treasury note (1.36%) and the 30-year Treasury bond (2.10%) in history, both occurring on Friday 7/08/16 (source: Treasury Department).

11. NEW vs. OLD – The median sales price of a new home sold nationwide during June 2016 was $306,700. The median sales price of an existing home sold nationwide during June 2016 was $247,700. Thus, the premium paid for a new home vs. an existing home was +24% (source: Census Bureau, National Association of Realtors).

12. WE’RE GLOBAL – Trade, defined as the combination of US exports and US imports, was $5.02 trillion in 2015, 28% of our $18.16 trillion economy as of 12/31/15. Trade was $1.69 trillion in 1995, 22% of our $7.80 trillion economy as of 12/31/95 (source: Commerce Department).

13. PLEASE WATCH THE ROAD – Only 14 US states prohibit all drivers from using hand-held cell phones while driving. 46 US states ban text messaging for all drivers (source: Governors Highway Safety Association).

14. IMPACT OF BREXIT – 71% of economists surveyed after the 6/23/16 UK referendum vote believe that the United Kingdom will slip into a recession within a year (source: Bloomberg).

15. H.O.F – Baseball’s Mike Piazza, the # 1,390th pick of the 1988 draft, is the lowest drafted player elected to the Hall of Fame. Paul Bacosa, drafted right before Piazza, never played a major league game (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$

THE MONTH OF AUGUST – The worst performing month for the S&P 500 since 1991 has been August.  The stock index has suffered an average loss of 0.6% (total return) during August over the last 25 years.  The best performing month since 1991 has been April, gaining an average of +1.9% (total return).  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.  HOT STREAK – The S&P 500 has set 7 record closes in the last 10 trading days through Friday 7/22/16, after having set 0 record closes in the previous 285 trading days (source: BTN Research).

3.  MISS A LITTLE, MAYBE MISS A LOT – Over the 6 years of trading through the end of last week (i.e., 7/23/10 through Friday 7/22/16), the S&P 500 was up +14.6% per year on a total return basis, i.e., counting the impact of reinvested dividends.  If you missed the 6 best performance days in those 6 years (i.e., 6 days in total, not 6 days each year), your average annual return was cut to just +10.1% per year.  If you missed the best 1% of all 1,511 trading days in those 6 years (i.e., 15 days in total), your annual return was +5.6% (source: BTN Research).

 4. SECOND LONGEST – The ongoing bull market for the S&P 500 (88 ½ months in duration), is the 2nd longest bull market since 1950, trailing only the 113 ½ month long bull that ended 3/24/00 (source: BTN Research).

5.  UNDER THE SAME ROOF – There are 118 million households in the United States.  The 118 million is split between 82 million “family” households and 36 million households that are occupied by 1 person living alone or by a group of unrelated people.  Of the 82 million “family” households, 5 million are multigenerational families, i.e., households consisting of 3 or more generations living together (source: Census Bureau).

 6. NOT TOGETHER – The total return of stocks and the total return of bonds have not been negative in the same year at any time over the last 40 years, i.e., 1976-2015.  The S&P 500 index was used as the stock measurement.  The Barclays Aggregate bond index, calculated using 6,000 publicly traded government and corporate bonds with an average maturity of 10 years, was used as the bond measurement (source: BTN Research).

7.  POTENTIAL VOTERS – The number of “Millennials” eligible to vote in the November 2016 election (69.2 million) is just under the number of “Baby Boomers” eligible to vote later this year (69.7 million).  “Millennials” are adults aged 19-35 in 2016, i.e., individuals born from 1981-1997.  “Baby Boomers” are defined as adults born from 1946-1964 (source: Pew Research).

 8. LESS THAN LAST YEAR – Lenders foreclosed on 197,425 homes in the first half of 2016, a total that is down 5.7% from the 209,281 foreclosures completed during the first half of 2015 (source: RealtyTrac).

9.  CHEAP GAS – The national average price of gasoline was $2.18 a gallon as of Friday 7/22/16, the lowest gasoline price during any July since 2004 (source: AAA).

10.  TAXES PAID – The top 5% of US taxpayers paid more in federal income taxes ($721 billion) than the bottom 95% of US taxpayers ($511 billion) for the 2013 tax year (source: Internal Revenue Service).

 11. MOST EVER – National health care expenditures in the United States during calendar year 2016 are projected to reach $3.351 trillion, or $10,346 per person (source: Centers for Medicare and Medicaid Services).

12.  NOT THE USA – There are 10 countries in the world that currently maintain the top credit rating from each of the 3 major credit rating agencies (S&P’s, Moody’s and Fitch Ratings), including Canada and Germany (source: FT).

 13. LOWER COST, HIGHER USAGE – A dual working couple in America making a combined $95,600 that turned 65 years old in 2015 is projected to receive $422,000 in Medicare benefits over their lifetime (a 2015 present value number), 3 times the $140,000 they paid in Medicare payroll taxes (also a 2015 present value number) during their working years (source: Urban Institute).

14.  NOT MUCH DIFFERENCE – A dual working couple in America making a combined $95,600 that turned 65 years old in 2015 is projected to receive $616,000 in Social Security benefits over their lifetime (a 2015 present value number), +13% more than the $543,000 they paid in Social Security payroll taxes (also a 2015 present value number) during their working years (source: Urban Institute).

 15. ALMOST – Pro golfer Phil Mickelson finished 2nd at the British Open on Sunday 7/17/16, losing to Swede Henrik Stenson.  The loss denied Mickelson his 6th major championship and was his 11th runner-up finish in golf’s 4 majors.  Only Jack Nicklaus, with 19 runner-up finishes in the majors, has more 2nd place trophies (source: PGA).

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