Login


Contact Info

4400 MacArthur Blvd, Suite 850
Newport Beach, California 92660
888.277.1974

Contact Us


Bill’s By The Number$

1. ALMOST TEN YEARS – In the first 3-years following its 3/09/09 bear market closing low, the S&P 500 gained +114% through 3/09/12 (i.e., total return result including the impact of reinvested dividends). In years 4-10 (i.e., the next 7 years) from 3/09/12 to last Friday 3/01/19), the S&P 500 has gained an additional +139%. 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 ALWAYS UP – The nearly 10-year bull market run for the S&P 500 that began on the morning of 3/10/09 has gained +411% (total return) through last Friday 3/01/19, an annualized return of +17.8% per year. During the entire 10 years, the index has had 6 separate “corrections” of at least 10% but less than 20%. The ending dates of the 6 “corrections” are 7/02/10, 10/03/11, 8/25/15, 2/11/16, 2/08/18 and 12/24/18 (source: BTN Research).

3. WHAT DO THEY KNOW? – 6 days before the start of the current 10-year bull market for the S&P 500 that began on 3/10/09, 70% of stock investors surveyed were “bearish.” Last week, just 20% of stock investors surveyed were “bearish” (source: American Association of Individual Investors).

4. WORST TO FIRST – The worst performing stock in the S&P 500 in 2018 lost 67.1% last year. That same stock is ranked # 1 among all stocks in the index this year through 2/28/19, up +67.7% YTD (source: BTN Research).

5. PAST PERFORMANCE IS NO GUARANTEE – Only 16% of 1,013 adults surveyed believe that stock market performance “during the decades before I was born” is a “very or extremely important” factor to be considered in making financial decisions (source: J. Choi and A. Robertson’s study “What Matters to Individual Investors?”).

6. GIVE ME THREE – Unless the government revises the nation’s GDP growth for 2018 on 3/28/19 to show at least +3% year-over-year growth (the 2018 result was initially reported at +2.9% on Thursday 2/28/19), it will be the 13th consecutive year of “sub +3%” growth (2006-2018). The next longest streak in US history of “sub +3%” growth is the 4 years from 1930-1933. Gross Domestic Product (GDP) is the annual market value of all goods and services produced domestically by the United States (source: Commerce Department).

7. DEMAND EXCEEDS SUPPLY – 4.1 million Brits were waiting to be admitted to a hospital in England to have non-urgent surgery as of 9/30/18 (e.g., cataract surgery, hip replacement surgery), the highest number of citizens waiting for surgery since August 2007 (source: National Health Service England).

8. BABY BONDS – Democratic presidential candidate Cory Booker has proposed a government-funded savings account for newborn children. The “American Opportunity Accounts” would be established with $1,000 for every child born in the country, augmented annually by $0 – $2,000 depending upon the size of a family’s income. The accounts, managed by the Treasury Department, would seek a target return of approximately +3% per year and could not be accessed until the child’s age 18 (source: American Opportunity Accounts Act).

9. OWNERS AND RENTERS – The 110.7 million households that existed in the United States on 12/31/08 were split 68/32 between 74.7 million owners and 36.0 million renters. The 122.5 million households in the United States on 12/31/18 were split 65/35 between 79.4 million owners and 43.1 million renters (source: Census Bureau).

10. IT’S GETTNG BETTER ALL THE TIME – American banks repossessed 230,000 homes in 2018, 292,000 homes in 2017, 379,000 homes in 2016 and 450,000 homes in 2015 (source: ATTOM Data Solutions).

11. MAESTRO – Former Fed Chairman Alan Greenspan turns 93 years old this Wednesday (3/06/19). Greenspan was the Fed’s Chairman for 18 ½ years beginning 8/11/87 through 1/31/06 (source: Federal Reserve).

12. UNION CARD – In the last 35 years, the percentage of American workers that are members of a union has been cut in half, dropping from 20.1% in 1983 to 10.5% in 2018. Hawaii had the highest percentage (23.1%) of union workers in 2018 while North Carolina (2.7%) had the lowest percentage (source: Department of Labor).

13. BACK AND FORTH – In national elections going back to 1928, the United States has elected 7 Republican presidents (beginning with Hoover and ending with Trump) and 7 Democratic presidents (beginning with FDR and ending with Obama) (source: BTN Research).

14. SHRINKING INDUSTRY – There were 457,800 workers in the newspaper industry in June 1990, a total that has fallen to 139,900 by December 2018 (source: Bureau of Labor Statistics).

15. BACK-TO-BACK – The 2000 New York Yankees professional baseball team was the last major league team to repeat as World Series champs, a feat the Boston Red Sox will attempt to duplicate in 2019 (source: MLB).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. SIX CORRECTIONS – Since the beginning of the current bull market for the S&P 500 (on 3/10/09 or 10 years ago), the stock index has suffered 6 tumbles of at least 10% but less than 20%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market (source: BTN Research).

2. LUCKY – A person 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, i.e., as of 12/31/81. A person with $1 million invested in the S&P 500 as of 1/01/82 withdrawing an inflation-adjusted $100,000 per year would have $4.59 million remaining after 37 years, i.e., as of 12/31/18. 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. RED FEBRUARY – The last time that February did not produce the largest monthly deficit during a fiscal year was in fiscal year 2002 or 17 years ago (source: Treasury Department).

4. START RIGHT AWAY – A child born in February 1997 (22 years ago) who started college in the fall of 2015 is scheduled to graduate from an average 4-year public in-state college in May 2019. If the child’s parents had invested $139 per month beginning at the child’s 1997 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 expenses of tuition, fees, room and board (the 4-year cost was $81,880). 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).

5. TOP SHELF – To rank in the top 0.1% of US taxpayers in tax year 2016, i.e., top 1 out of 1,000 taxpayers, required an adjusted gross income of $2,124,117 (source: Internal Revenue Service).

6. MORTGAGE DEBT – For the average American household, mortgage debt represents 67% of total household debt. Aggregate household debt (e.g., mortgages, credit cards, auto loans) as of 12/31/18 was $13.54 trillion. Aggregate mortgage debt as of 12/31/18 was $9.1 trillion (source: Federal Reserve Bank of New York).

7. UPBEAT – 69% of 1,017 adults surveyed in January 2019 believe that they will be “financially better off in 1 year,” a result that is 2 percentage points less than the all-time record of 71% recorded in March 1998. This survey has been conducted since August 1977. The 1998 record was achieved during a stretch for the S&P 500 that produced annual returns of at least +20% (total return) for 5 consecutive years (1995-1999) (source: Gallup).

8. NO WORK – 37% of retired Americans report they retired earlier than planned as a result of health problems, buyout packages, layoffs, grandchildren, or caring for an aging parent (source: Health and Retirement Study).

9. GULP! – In legislation signed by President Donald Trump on Friday 2/15/19 that authorized fiscal year 2019 spending of $333 billion for 9 federal agencies, $62 billion was allocated to the budget of the Department of Homeland Security. $435 million of the $62 billion was budgeted to the “Countering Weapons of Mass Destruction Office” for research and development, operations and equipment (source: Congress).

10. ANOTHER ONE – The national emergency announced on 2/15/19 is the country’s 32nd active and ongoing national emergency. The oldest active national emergency was enacted on 11/14/79 (source: Federal Register).

11. OLDER AGE – Pension reforms for most of Pennsylvania state employees that were passed in 2017 and implemented in 2019 have increased the retirement age for newly hired workers from 65 to 67 (source: PSERS).

12. TIT-FOR-TAT – The initial tariffs in the US-China trade war were implemented on 7/06/18. In the 7 ½ months since then, the United States has imposed tariffs on $250 billion of Chinese imports and China has imposed tariffs on $110 billion of US imports (source: United States Trade Representative).

13. POLITICS – The House of Representatives is controlled 235-199 by the Democrats (with 1 open seat in North Carolina’s 9th District), the Senate is controlled 53-47 by the Republicans (counting 2 Independents who caucus with the Democrats) and the nation’s governorships are controlled 27-23 by the Republicans (source: Congress).

14. OUT OF BUSINESS – 5,524 brick-and-mortar retail stores closed nationwide in 2018, down from a record 8,139 closures in 2017. Another 2,187 retail stores have closed YTD through 2/09/19 (source: Coresight Research).

15. OFF TO AUGUSTA – President Trump has installed (at his own cost) a $50,000 indoor golf simulator in his personal residence in the White House (source: Golf Digest).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. ALMOST ALWAYS – Since 1950, there have been 60 different 10-year periods (i.e., the 10-years from 1950-59, 1951-60, 1952-61, . . . 2009-18). The S&P 500 has produced a positive total return result in 58 of the 60 decade-long periods, i.e., 97% of the time. 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. ECONOMIC DOWNTURN – 9 of the last 10 recessions in the United States began under a Republican president going back 66 years to 1953. The only recession over this time span that began with a Democratic president in the White House was a 6-month recession that began in January 1980 during Jimmy Carter’s last year as president (source: National Bureau of Economic Research).

3. LESS FOREIGN BUYERS – Foreign investors, led by China and Japan, held $6.2 trillion of US Treasury securities as of November 2018, just under 40% of total US Treasury debt. That’s the lowest percentage held by foreign investors in the last 15 years (source: Treasury Department).

4. COUNTRY IN CHAOS – Venezuela has the largest estimated oil reserves in the world (301 billion barrels), nearly 8 times the estimated reserves of the United States (39 billion) (source: World Atlas).

5. BUT WHAT DO THEY PAY? – 63% of 1,993 registered voters surveyed in early February 2019 believe that “upper income people pay too little” in taxes (source: Morning Consult + Politico).

6. THE RICHEST FIVE PERCENT – The top 5% of US taxpayers in tax year 2016 (the latest year for which tax data has been released) made at least $197,651 of adjusted gross income (AGI), received 35% of all AGI nationwide and paid 58% of all the federal income tax paid by Americans (source: Internal Revenue Service).

7. TOP AND BOTTOM – In tax year 2016, the top 10% of taxpayers, i.e., the top 14.1 million tax returns ranked by adjusted gross income (AGI), paid 69% of the total $1.44 trillion paid in federal income taxes by all US taxpayers. The bottom 75% of taxpayers, the bottom 105.7 million returns ranked by AGI, paid 14% of the total $1.44 trillion paid in federal income taxes (source: Internal Revenue Service).

8. BORROWING – The US government has maintained financial records since 1789, i.e., 230 years. From 1789 to 3/16/09 (220 years), our government created $11 trillion of debt. From 3/16/09 to 2/11/19, i.e., the last 10 years, our government created another $11 trillion of debt, reaching a record $22 trillion (source: Treasury Depart.).

9. UGH! – The US government is spending $12.4 billion a day. If our government began running a $1 billion profit per day, i.e., tax revenues in excess of outlays, and used that daily surplus to pay down our $22 trillion debt, the USA will be debt free in 60 years and 4 months, or by June 2079 (source: Treasury Department).

10. A LOT OF SENIORS – By the year 2050, approximately a generation from today, 330 million Chinese will be over the age of 65. By comparison, there are 328 million Americans alive today (source: Census Bureau).

11. EVERY DAY – An estimated 10,400 Americans will turn 65 years old each day this year (2019). This group represents the 9th year of 19 years of “Baby Boomers” turning age 65. An estimated 11,500 Americans will turn 65 years old each day in the year 2029 (source: Government Accountability Office).

12. EXPENSIVE EDUCATION – Outstanding student loan debt in the USA was $1.46 trillion as of 12/31/18, up +128% from $640 billion as of 12/31/08 (source: Federal Reserve Bank of New York).

13. JUST SAVE – Employers in Oregon who do not offer their employees access to retirement benefits can join “OregonSaves,” a statewide program started 2 years ago. Employees of participating firms are enrolled in a Roth IRA with automatic post-tax deferrals of 5% of wages, increasing by 1 percentage point per year up to 10% of pay. Employees can opt out and can change their deferral percentage. Similar programs are being developed in California, Connecticut, Illinois and Maryland (source: Center for Retirement Research).

14. MOVING FOR LOTS OF REASONS – Population data for the 12 months ending 6/30/18 showed that Florida added the largest number of Americans (+132,602) who relocated to its state, i.e., “net domestic migration,” while the state of New York was the largest population loser (a decline of 48,510) (source: Census Bureau).

15. ACTS LIKE A SALARY CAP – Just 2 major league baseball teams paid the league’s “luxury tax” in 2018 – the Boston Red Sox paid $11.95 million and the Washington Nationals paid $2.39 million. The “luxury tax” was levied on teams with a 2018 payroll in excess of $197 million (source: MLB).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. HISTORICAL PERSPECTIVE – Since 1950, there have been 60 different 10-year periods (i.e., the 10-years from 1950-59, 1951-60, 1952-61, . . . 2009-2018). The S&P 500 index produced an average annual total return of less than +7% during 15 of the 60 decade-long periods (25% of the time). 19 of the 60 periods (32% 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. JUST A ROTTEN DAY – On the day that Janet Yellen was sworn in as Fed Chair (2/03/14), the S&P 500 was down 2.3% (total return), the worst trading day for the index in 2014. On the day that Jerome Powell was sworn in as Fed Chair (2/05/18), the S&P 500 was down 4.1% (total return), the worst trading day for the index in 2018 (source: BTN Research).

3. SHORT-TERM – 52.3% of all US Treasury debt at the end of fiscal year 2018 (9/30/18) had a maturity of less than 3 years, i.e., debt that will mature before 9/30/21 and will be rolled over or paid off (source: Treasury Dept.).

4. MORE THAN HALF – 53% of American taxpayers reported less than $40,000 of adjusted gross income for tax year 2016 (source: Internal Revenue Service).

5. NOT STOPPING – 48% of working Americans surveyed in 2018 anticipate working past age 65, up from just 16% of workers who felt that way 30 years earlier (source: Employee Benefit Research Institute).

6. DEBT CEILING – Our national debt was $21.96 trillion as of Thursday 2/07/19. Legislation signed into law by President Donald Trump on 2/09/18 (a year ago) suspended our country’s debt ceiling limit until 3/01/19, i.e., there is no statutory limit on our nation’s borrowing until next month. The debt ceiling limit has been raised, temporarily extended or suspended 86 times since 1960 (source: Treasury Department).

7. ANOTHER OIL RECORD – US field production of crude oil reached a record 11.9 million barrels a day in November 2018. The November total was the 6th consecutive month that a new all-time record was set. Field production data has been collected each month in the USA since 1920 (source: Department of Energy).

8. HAVE THEY CHANGED THEIR MIND? – The Federal Reserve’s statement following their 1/30/19 meeting suggested to bond market watchers that their next interest rate move could be “down” instead of “up.” The shortest span between the end of a rate-tightening cycle (i.e., raising rates) and the first Fed easing (i.e., cutting rates) in the last 30 years was just 3 meetings over 5 months in 1995, i.e., 2/01/95 rate hike to a 7/06/95 rate cut. The last Fed rate hike took place on 12/19/18 (source: Federal Reserve).

9. NEW TAX – Democratic Presidential candidate Elizabeth Warren (D-MA) proposed on 1/25/19 an annual “wealth tax” of 2% on household wealth in excess of $50 million and 3% on household wealth in excess of $1 billion. E.g., Jeff Bezos, America’s richest person on the Forbes 400 list in October 2018 (worth $160 billion as of that date) would pay a “wealth tax” of $4.77 billion annually on a net worth of $160 billion (source: BTN Research).

10. CARS – The sales of vehicles in China in 2018 totaled 28.1 million, down 3% from 28.9 million in 2017, China’s first year-over-year decline in vehicles sales in 20 years (source: China Association of Automobile Manufacturers).

11. FIRST STATE TO DO THIS – Publicly held companies domiciled in the state of California are required by a new state law to have at least 1 woman on their board of directors by 12/31/19. The gender requirement increases to “2 of 5 directors” or “3 of 7 directors” by 12/31/21 (source: National Public Radio).

12. DEADLINE – The 17 Washington lawmakers selected to reach a compromise on border-security funding have until this Friday 2/15/19 to release a proposal (source: Congress).

13. GOOD FOR HOME BUYERS – The average interest rate nationwide on a 30-year fixed rate mortgage was 4.41% last week, down from 4.94% as of 11/15/18 or just 3 months ago (source: Freddie Mac).

14. SITTING PRETTY – 40% of American homeowners own their home free and clear of any debt, i.e., no outstanding mortgage or existing home equity loan. Of the 60% of homeowners with debt, the median outstanding balance is $126,000 (source: Census Bureau).

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 2019 is $555,000. To rank in the top 1% of all US taxpayers (based upon 2016 tax data) required an adjusted gross income level of at least $480,804 (source: MLB).

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission – Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. BAD THEN GOOD – The S&P 500 gained +8.0% (total return) in January 2019, a performance that ranks in the top 4% of monthly returns in the last 30 years. Ironically, the S&P 500 lost 9.0% (total return) in December 2018, a performance that ranks in the bottom 2% of monthly returns in the last 30 years. 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. ALMOST ALL WERE UP – 458 individual stocks in the S&P 500 were up during the month of January 2019, including 40 stocks that were up at least +20% for the month (source: BTN Research).

3. ROLLER COASTER – The best stock in the S&P 500 during January 2019 was up +42.8% for the month. This follows a 32.2% loss for the stock during 2018, a +26.7% gain in 2017 and a 17.9% loss in 2016 (source: BTN Research).

4. YELLEN vs. POWELL – During the 4-years that Janet Yellen served as Fed Chair (i.e., 2/03/14 to 2/02/18), the S&P 500 gained +72.4% on a total return basis (an average of +14.6% per year) and achieved 156 record closing highs. The first year for Jerome Powell serving as Fed Chair ends today (2/05/18 to 2/04/19). Over the last year, the S&P 500 has set 5 all-time closing highs while losing 0.04% (total return) (source: BTN Research).

5. REQUIRED MINIMUM DISTRIBUTIONS – If you turned age 70 ½ sometime in 2018, then you must begin taking annual withdrawals from your IRA accounts no later than 4/01/19. If you delay your 1st withdrawal until 4/01/19, you must also take a 2nd distribution by 12/31/19 (source: Internal Revenue Service).

6. ESTATE TAXES – An estimated 2.8 million Americans died in 2018. Of the 2.8 million deaths, an estimated 4,000 of those deceased individuals (i.e., 1 in every 700 deaths) died with an estate worth more $11.2 million, the maximum dollar amount that can be passed estate tax-free per decedent with proper tax planning (source: Tax Policy Center).

7. HOW LONG COULD YOU LAST? – Just 29% of working Americans surveyed in the summer 2018 had emergency savings set aside that would allow them to survive at least 6 months without any current cash flow from a job (source: Bankrate’s Financial Security Index).

8. ONE ESPRESSO PLEASE – 27% of 1,000 Millennials surveyed in July 2018 spend more money on coffee each month than what they set aside and invest monthly for their eventual retirement (source: Lendedu.com).

9. BACK AT WORK – American employers reported an increase of +304,000 new net jobs in January 2019, the 100th consecutive month of jobs gains in our country, i.e., from October 2010 through and including January 2019. An average of +202,000 new jobs each month have been created over the 100-month run (source: DOL).

10. CHINA WEAKNESS – US exports to China were $110.6 billion in 2012, rising +18% (i.e., +3.3% per year) to $130.4 billion in 2017. US exports to China are $102.5 billion YTD through 10/31/18, reflecting the impact of tariffs and a slowing Chinese economy (source: Commerce Department).

11. TWO TIMES TO THREE TIMES – Estimated mandatory expenses of the US government are twice as large as discretionary expenses during the current 2019 fiscal year, i.e., $2.695 trillion to $1.334 trillion. Estimated mandatory expenses of the US government are 3 times as large as discretionary expenses during the 2029 fiscal year, i.e., $4.584 trillion to $1.530 trillion (source: Congressional Budget Office).

12. BACK IN BUSINESS – Greece issued 2.5 billion Euros of 5-year sovereign debt on Tuesday 1/29/19, the first debt issued by Greece’s government in 9 years (source: Financial Times).

13. FROZEN – The low temperature in Chicago in the early hours of Wednesday 1/30/19 fell to -23 degrees, tied for the 5th coldest day in the city’s history. The record is -27 degrees set on 1/20/85. Weather records have been maintained in Chicago since 1872, i.e., for the last 147 years (source: CBS Chicago).

14. SUPER BET – Prior to the 2/03/19 Super Bowl # 53, the underdog in the big game had won just 17 of 52 games but had won 7 of the last 11 games. The Los Angeles Rams were 2 ½ point underdogs in yesterday’s football game vs. the New England Patriots (source: BTN Research).

15. SAME CITIES – The Boston Red Sox beat the Los Angeles Dodgers in 5 games to win the 2018 World Series, winning the clinching game on 10/28/18. Just 98 days after winning baseball’s title, the New England Patriots faced off vs. the Los Angeles Rams in Super Bowl # 53 yesterday (2/03/19) in Atlanta (source: BTN Research).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. FIRST QUARTER – Over the last 25 years (1994-2018), the S&P 500 has gained an average of +1.73% (total return) during the 1st quarter (January-February-March), a total that represents 19% of the index’s 25-year average annual return of +9.08%. 47% of the index’s overall gain has occurred during the 4th quarter (October-November-December) over the last 25 years. 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. NEXT LONGEST – The nation’s longest government shutdown ended Friday 1/25/19 at 35 days. The second longest shutdown lasted 21 days, ending on 1/06/96. In the 6 months following the 21-day shutdown, the S&P 500 gained +6.6% (source: BTN Research).

3. ALL WERE HIGH – At the end of 2017 (12/11/17), 10 Wall Street equity strategists forecasted the closing value of the S&P 500 as of 12/31/18. Their predictions ranged from a low of 2675 to a high of 3100, up from an actual 12/31/17 close of 2674. The actual 12/31/18 closing value for the S&P 500 was 2507, equal to a 4.4% total return loss. The actual index close was lower than all 10 predictions (source: Barron’s).

4. DEAD WRONG – In the 12/31/17 issue of USA Today, writer Adam Shell wrote of “18 stocks to Consider for 2018: All of the 18 names are seen rising +25% or more, according to analysts.” Instead 17 of the 18 stocks lost money in 2018, and an equal investment in all 18 stocks fell 26.1% for the year (source: BTN Research).

5. RED AND BLUE PROBLEM – The national debt increased +86% during George W. Bush’s 8 years as president, reaching $10.63 trillion as of 1/20/09. The national debt increased +88% during Barack Obama’s 8 years as president, reaching $19.95 trillion as of 1/20/17. The national debt has increased +10% during Donald Trump’s first 2 years in the White House, reaching $21.95 trillion as of 1/20/19 (source: Treasury Department).

6. SALES PRICE – The median sales price of existing homes sold in the United States in December 2018 was $253,600, down from an all-time peak median sales price of $273,800 from June 2018. The low point for this statistic during the 2008-12 real estate crisis: $154,600 in January 2012 (source: National Association of Realtors).

7. GOTTA GIVE TO GET – 8 states have applied for and received government approval to add work requirements for some of the people enrolled in Medicaid. Of the 8 states (Arizona, Arkansas, Indiana, Kentucky, Maine, Michigan, New Hampshire and Wisconsin) only 2 states (Arkansas and Indiana) have implemented the work requirement. The most common work requirement – 80 hours a month (source: Kaiser Family Foundation).

8. OTHER PEOPLE’S MONEY – 59% of 1,001 registered voters surveyed in early January 2019 support the idea of raising the top individual marginal tax rate from 37% to 70% (source: Hill-HarrisX poll).

9. CRAZY HIGH – For the 13 consecutive years from 1951-1963, the top individual marginal tax rate was at least 91%. The top individual marginal tax rate for 2019 is 37% (source: Internal Revenue Service).

10. WAY DOWN – US banks repossessed 230,305 homes in 2018, down 21.0% from 291,579 repossessions in 2017, down 39.3% from 379,437 repossessions in 2016 and down 48.8% from 449,900 repossessions in 2015. The peak in repossessions: 1,050,500 in 2010 (source: Attom Data Solutions).

11. JOBS – Iowa had the lowest unemployment rate (2.4%) in the nation as of 12/31/18. Texas added +391,800 jobs in 2018 (to 12.7 million), more than 3 times the +121,900 jobs added in New York (source: Department of Labor).

12. OUT-OF-WORK – Initial claims for unemployment benefits were just 199,000 (for the week ending Saturday 1/19/19), the lowest level in the nation since 11/15/69. By comparison, at the depths of the real estate crisis that began in 2008, first-time claims for jobless benefits reached 665,000 on 3/28/09 (source: Department of Labor).

13. REALLY?! – 1,777 Americans filed with the Federal Election Commission to run for president in 2016, a requirement for candidates who raise or spend at least $5,000 of contributions and expenditures (source: FEC).

14. EXTREME POVERTY – 45% of the world’s population (3.4 billion out of 7.5 billion) survive on less than $5.50 a day (source: World Bank).

15. MUST BE PRETTY GOOD – Football Bowl Subdivision schools (FBS), formerly known as Division 1-A, can have a maximum 85 scholarship players on their roster. Isaiah “Zeke” Marshall, a 7th grader in Southfield, MI was offered a football scholarship by the University of Michigan Wolverines in January 2019. Marshall, a 5 foot-8 inch, 150 lbs. 13-year old QB, is due to graduate high school in May 2024 (source: ESPN).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

1. AFTER THE FALL – The S&P 500 was down 9.0% (total return) in December 2018, the 7th worst monthly performance for the index in the last 30 years, i.e., 360 months. In the 12 months following the 6 separate months that were worse than last December (i.e., worse than a 9.0% loss), the index was up 5 of 6 times and gained an average of +22.4% (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. TRILLIONS – The US stock market was worth $27.4 trillion as of 12/31/18. The S&P 500 makes up 81% of the total US stock market capitalization as of 12/31/18, equal to $22.1 trillion (source: BTN Research).

3. TRUMP STOCK MARKET – The S&P 500 gained +10.6% per year (total return) over the first 2 years of the Trump administration, i.e., the 24 months from President Trump’s 1/20/17 inauguration through last Friday 1/18/19. That result is above the index’s trailing 50-year average annual return of +9.8% achieved over the 5-decade period from 1969-2018 (source: BTN Research).

4. NOT EVEN FIVE PERCENT – The US population was 328 million as of 1/15/19, 4.4% of the world’s population (7.55 billion) as of that date, i.e., only 1 out of every 23 humans is an American (source: Census Bureau).

5. COSTS LESS TODAY – The average price of gasoline nationwide was $2.24 a gallon as of Friday 1/18/19. The average price of gasoline nationwide in 1969 (i.e., 50 years ago) was 35 cents. After adjusting for 50 years of inflation, the 35-cent price in 1969 is equivalent to $2.48 in 2019 dollars (source: AAA, Department of Labor).

6. COME ON BACK – The “Tax Cuts and Jobs Act” includes a 1-time repatriation tax of 15.5% on the $2.6 trillion of profits held in overseas subsidiaries of US multinational firms. The 15.5% tax rate replaced the existing 35% top marginal rate that may have been deterring movement of the funds back to America today. A similar tax holiday was utilized in 2005 when a 5.25% one-time tax incentive (also down from a top marginal corporate tax-rate of 35%) motivated American businesses to repatriate $312 billion back to the USA. For the first 9 months of 2018, American businesses repatriated $571 billion back to the USA (source: Commerce Department).

7. SOME DON’T PAY ANYTHING – 50.2 million of the 150.3 million tax returns filed in tax year 2016 (the latest year tax data is available), legally did not pay any federal income tax, i.e., 33% of all returns paid nothing. The remaining 100.1 million tax returns paid $1.45 trillion of federal income tax (source: Internal Revenue Service).

8. DIDN’T MAKE ANYTHING – Although 33% of the 150.3 million tax returns filed in tax year 2016 did not pay any federal income tax, the average adjusted gross income of these “zero payers” was only $12,900 (source: IRS).

9. SOME MAKE A LOT – 5% of the 150.3 million tax returns filed for tax year 2016 reported adjusted gross income (AGI) of at least $200,000, received 35% of all AGI and paid 58% of all federal income tax (source: IRS).

10. YOU ARE ON YOUR OWN – 58% of 1,504 small businesses surveyed in August and September 2018 (defined as American companies with 2-99 employees) do not offer any retirement benefits, e.g., defined benefit pension plan, profit-sharing plan or a 401(k) defined contribution plan (source: LIMRA).

11. TRAVEL COSTS – Renting a 20-foot truck to move from Phoenix to Chicago this month costs $1,196, 53% of the $2,258 it costs to rent the same 20-foot truck to move from Chicago to Phoenix. Illinois was the # 2 “moving out of” state in 2018 while Arizona was the # 5 “moving to” state in 2018 (source: United Van Lines).

12. WHY DON’T THEY? – 137 million Americans voted in the November 2016 presidential election when Donald Trump became president. Another 113 million “voting-age” Americans could have voted but did not (source: United States Elections Project).

13. FRIENDS IN LOW PLACES – Just 8% of 1,025 American adults surveyed in December 2018 described the “honesty and ethical standards” of members of Congress as “high” or “very high,” compared to 58% of those surveyed who believe lawmakers’ “honesty and ethical standards” are “low” or “very low” (source: Gallup).

14. WHAT IF? – The average interest rate paid by the government on its interest-bearing debt was 2.560% as of 12/31/18, more than one percentage point less than the 3.866% paid as of 12/31/08, i.e., 10 years ago (source: Treasury Department).

15. SUPER GAME – Super Bowl # 53 will be held in Atlanta on 2/03/19. No team in NFL history has even played in the Super Bowl on their home field. Next year’s game will be played in Miami (source: NFL).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. INVEST FOR THREE-YEARS – Since 1926, 84% of the rolling 3-year periods for the S&P 500 index (i.e., the 91 separate 3-years beginning 1926-28, then 1927-29, . . . 2016-18) have produced a positive 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. MAJORITY OF THE TIME – Of the 10 bear markets for the S&P 500 index that have occurred since the end of WWII (i.e., declines of at least 20%), 7 took place concurrently with a recession (source: BTN Research).

3. YOU NEVER KNOW – Financial reporter Adam Shell retired from his position with USA Today last week (1/08/19) after 19 years with the paper. Shell is famous for his 10/10/02 article titled “Where’s the bottom? No end in sight” that began with the sentence “The worst bear market since the Great Depression just keeps getting worse.” In fact, the S&P 500 had closed at a bear market bottom the previous night (10/09/02) at 777 and then proceeded to climb +102% over the next 5 years before peaking at 1565 on 10/09/07 (source: USA Today).

4. GOING UP – Earnings per share of companies in the S&P 500 are projected to increase +8% in 2019. Actual earnings per share increased +20.5% in 2018 (source: FactSet).

5. OVER THERE – The international stock index EAFE has been negative in 5 of the last 11 years, including a 13.8% drop (total return) in 2018. The EAFE is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks including currency fluctuations, differing financial accounting standards and possible political and economic volatility (source: BTN Research).

6. WHO IS THE NEW BUYER? – The Federal Reserve’s plan from 9/20/17 began the unwinding of “Quantitative Easing” (and shrinking of the Fed’s balance sheet) by having bonds mature without reinvesting the principal into new bonds. “Quantitative Shrinking” has resulted in $355.5 billion of bonds roll off the Fed’s balance sheet during 2018, an average of nearly $7 billion a week (source: Federal Reserve).

7. COMPLETE YOUR TAXES NOW – As a result of the December 2017 “Tax Cuts and Jobs Act,” 65% of US taxpayers will pay less in taxes for tax year 2018 than they did in tax year 2017, 6% will pay more and the remaining 29% will experience no material change up or down (source: Tax Policy Center).

8. DIFFERENT TARGET PRICES – The breakeven price of oil for Saudi Arabia to balance their sovereign budget is $88 a barrel. The breakeven price for Russia is $53 a barrel. The breakeven price for oil produced in the Permian Basis is $50 a barrel. The price of oil closed at $51.91 a barrel last Friday 1/11/19 (source: International Monetary Fund, Federal Reserve Bank of Dallas).

9. THREE – If the nation’s GDP growth for 2018 that will be reported on 1/30/19 shows an increase of at least +3% for last year, it will end a record streak of 12 consecutive years of “sub +3%” growth (2006-2017). The next longest streak in history of “sub +3%” growth is the 4 years from 1930-1933 (source: Commerce Department).

10. JUST DO SOMETHING – In a 326-page document released on 12/13/18 titled “Options for Reducing the Deficit: 2019 to 2028,”, the Congressional Budget Office suggests 38 ideas to reduce mandatory spending, 34 ideas to reduce discretionary spending and 40 ideas to increase revenue (source: Congressional Budget Office).

11. CARS – Americans purchased 17.3 million new cars and light trucks in 2018, a record 4th consecutive year above 17 million in sales. The low point for sales in the last 2 decades – 10.4 million sales in 2009 (source: Autodata).

12. BE PATIENT – Individuals who receive a referral from a general practitioner wait on average 5 months before receiving treatment from a specialist under Canada’s publicly funded health-care system (source: Fraser Institute).

13. WANTED: MORE BABIES – The “total fertility rate” (TFR) of US women in 2017, defined as the expected number of lifetime births per 1,000 women given current birth rates, was 1,765.5, the lowest number reported since 1978 (1,760.0). A TFR of 2,100.0 is considered the level for a population to replace itself (source: CDC).

14. GREEN – There are 98 freshman legislators in the new 116th Congress (out of 535 lawmakers). 58 of the 98 first-time politicians (59%) did not have any prior political experience, e.g., they never served as a state legislator, a state attorney general, a mayor of a city or as a member of a city council (source: The Brookings Institution).

15. JOIN A TEAM SPORT – Harvard University offers 42 varsity sports for its student-athletes, more than any other NCAA Division I college in the United States, including the sports of sailing and snow skiing. Ironically, Harvard does not offer athletic scholarships (source: Harvard University).

 

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. TIME IN THE MARKET – Since 1950 (i.e., 1950-2018), the S&P 500 index has been up 54% of 17,361 trading days, 60% of 828 months, 66% of 276 quarters and 72% of 69 years. 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. ONE DAY, ONE YEAR – Since the beginning of 2008 (i.e., 2008-18), the S&P 500 has had 58 trading days that produced a larger one-day decline when compared to the worst year for the bond market over the last 40 years (a total return loss of 2.9% in 1994). The Bloomberg Barclays US Aggregate Bond Index calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement. The index is a major benchmark for US bond investors (source: Bloomberg Barclays).

3. AFTER THE FALL – From its all-time closing high of 2931 set on 9/20/18, the S&P 500 dropped 19.8% to close at 2351 on 12/24/18, nearly falling the necessary 20% to qualify as the index’s 11th bear market since the end of WWII. For the earlier 10 bears, the S&P 500 took an average of 24 months to retrace its steps and close above the index’s previous closing high that was achieved before the “20%-plus” decline (source: BTN Research).

4. YEAR THREE IN THE WHITE HOUSE – This year (2019) is the 3rd year of Donald Trump’s 1st 4-year presidential term. The S&P 500 has been positive on a total return basis during 21 of the last 23 “presidential 3rd-years,” i.e., 3rd-years dating back to 1927, including the last 19 in-a-row. The average performance for the S&P 500 during the last 23 “presidential 3rd-years” has been a gain of +16.1% (total return) (source: BTN Research).

5. WE NEED MORE PEOPLE – As of 7/01/18, the population of the USA had grown +0.62% on a year-over-year basis, the lowest annual growth rate recorded by our country since 1937. Over the most recent 12 months analyzed, our population grew by +2.0 million people, the combination of 3.86 million births, 2.81 million deaths and 979,000 immigrants who became US citizens (source: Census Bureau).

6. FLIP-FLOP – The 116th Congress began last Thursday 1/03/19. When the 115th Congress ended, Republicans held a 236-196 majority in the House (with 3 vacancies). With the new session, Democrats hold a 235-199 majority with 1 House seat vacancy in North Carolina (source: House of Representatives).

7. TWO MORE – Republicans held a 51-49 majority in the Senate last year (2 independents caucus with 47 Democrats), increasing to a 53-47 majority as the 2019 Congress began last week (source: Senate).

8. STILL BIG, BUT A LITTLE LESS – China, the largest foreign holder of US Treasuries, has reduced its ownership of US debt instruments for 5 consecutive months, i.e., June 2018 through and including October 2018. Even after the pullback, China owns $1.14 trillion of US Treasuries (source: Treasury Department).

9. SUPER SENIORS – The number of Americans at least age 75 is projected to double over the next 20 years, rising from 23 million in 2020 to 45 million in 2040 (source: Census Bureau).

10. THEY FORGOT TO PLAN – 62% of the 43 million Americans on Social Security receive at least 50% of their retirement income via their monthly Social Security benefit (source: Social Security Administration).

11. HARDER TO FILL – The number of job openings in the United States has increased by +1.1 million over the last 12 months, rising to 7.1 million in October 2018 from 6.0 million in October 2017 (source: Department of Labor).

12. NOT WORKING – Today (1/07/19) marks the 17th day of the government shutdown. That duration that would tie this stoppage for the 2nd longest in US history. There have been 21 government shutdowns (the first was in 1976) and the longest lasted 21 days (source: Congressional Research Service).

13. HOW IT’S SPENT – 63% of the $3.5 trillion that Americans spend annually on health care is for hospital care (33% of the $3.5 trillion or $1.1 trillion), physician and clinical services (20% of the $3.5 trillion or $694 billion) and prescription drugs (10% of the $3.5 trillion or $333 billion) (source: Centers for Medicare & Medicaid Svcs.).

14. RECORD – The US field production of crude oil reached 11.7 million barrels a day in November 2018, an all-time monthly record volume based upon data maintained since January 1920 (source: Department of Energy).

15. CRUSHED IT – Pro golfer John Daly was the PGA Tour’s longest hitter in 1998 with an average driving distance of 299.4 yards. Now 20 years later, 299.4 yards per drive would have placed 54th on the PGA tour for 2018. Cameron Champ led the tour last year with an average driving distance of 328.2 yards (source: PGA).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. FOR THE YEAR – The S&P 500 lost 4.4% (total return) during 2018, breaking a streak of 9 consecutive “up” years for the $22.1 trillion index that was created in 1957. The raw index fell 6.2% but after factoring in the impact of reinvested dividends, the overall decline was reduced by 1.8 percentage points. 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. LONG-TERM – The S&P 500 has gained an average of +9.8% per year (total return) over the last 50 years (i.e., 1969-2018). The index was down in 2018 but has been positive in 14 of the last 16 years. Over the long-term, the S&P 500 has been up during 39 of the last 50 years, i.e., 78% of the time (source: BTN Research).

3. UP vs. DOWN – The split between “up” and “down” trading days for the S&P 500 over the last 50 years (i.e., 1969-2018, encompassing a total of 12,611 trading days) is 53% “up” and 47% “down.” The split during calendar year 2018 (there were 251 trading days last year) was also 53/47 (source: BTN Research).

4. INSIDE THE INDEX – Just 23 of the individual stocks in the S&P 500 gained at least +30% in 2018. 332 stocks finished the year with a stock price lower than where it started the year (source: BTN Research).

5. MISSING THE BEST – The total return for the S&P 500 over the last 10 years (2009-2018) was a gain of +13.1% per year (total return). If you missed the 10 best percentage gain days over the last 10 years (i.e., 10 days in total, not 10 days per year), the +13.1% annual gain falls to a +7.9% annual gain (source: BTN Research).

6. AVOID THE WORST – The total return for the S&P 500 over the last 10 years (2009-2018) was a gain of +13.1% per year (total return). If you avoided the 10 worst percentage days over the last 10 years (i.e., 10 days in total, not 10 days per year), the +13.1% annual gain rises to a +18.9% annual gain (source: BTN Research).

7. SMALL-CAPS – The small-cap Russell 2000 stock index lost 11.0% (total return) in 2018. The small cap index has gained +9.0% per year over the last 35 years (1984-2018). The Russell 2000 index is an unmanaged index of small-cap securities which generally involve greater risks (source: Russell).

8. FOREIGN STOCKS – The international stock index EAFE lost 13.8% (total return) in 2018. The foreign stock index has gained +8.2% per year over the last 35 years (1984-2018). The EAFE index is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks including currency fluctuations, differing financial accounting standards and possible political and economic volatility (source: BTN Research).

9. BROAD-BASED BOND INDEX – The taxable bond market was up a miniscule +0.01% in 2018 (total return) but has gained +5.1% per year (total return) over the last 25 years (1994-2018). The Bloomberg Barclays US Aggregate Bond Index (created in 1986), calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement. The index is a major benchmark for US bond investors (source: Bloomberg Barclays).

10. BARELY – The YTD total return for the Bloomberg Barclays US Aggregate Bond Index was negative every trading day in 2018 except for the final day of the year (12/31/18). If the index had been down for the year (it gained +0.01% for 2018) it would have been the 1st time in history that stocks (using the S&P 500) and bonds (using the Bloomberg Barclays US Aggregate Bond Index) were negative in the same calendar year (source: BTN Research).

11. TEN-YEAR NOTE – The yield on the 10-year Treasury note ended 2018 at 2.68%, up 0.27 percentage points from the 2.41% it finished at on 12/31/17. The 10-year note yield was 2.57% on 8/05/11, the day that the rating agency S&P downgraded the USA from a top-rating that our nation had held for 70 years (source: Treasury Department).

12. HOUSING – The average interest rate nationwide on a 30-year fixed rate mortgage was 4.55% at the end of 2018. The record low national average was 3.31% as of 11/22/12 or just over 6 years ago (source: Freddie Mac).

13. BAILOUT NOT NEEDED – No US bank failed in 2018, the first calendar year to achieve that result since 2006 (source: Federal Deposit Insurance Corporation).

14. OIL PRICES – The price of oil ended 2018 at $45.41 a barrel, down 24% from its 2017 close of $60.12. As of 10/03/18, oil was trading at $76.41 a barrel before falling $31 a barrel (off 41%) by year-end (source: CME Group).

15. OVERSPENDING – The national debt of the United States was $21.867 trillion as of Friday 12/28/18, an increase of $11.3 trillion over the last 10 years (source: Treasury Department).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.