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Bill’s By The Number$

Posted by: Vanessa Guadiana | Posted on: August 4th, 2014 | 0 Comments

  1. LAST FIVE MONTHS – Although the “August-December” total return performance for the S&P 500 over the last 25 years (1989-2013) has produced an average gain of just +3.9% (total return), 9 of the 25 years have generated at least a +10% gain over the final 5 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. LATE IN THE YEAR – The last time that the S&P 500 stock index achieved its calendar year closing high during the month of August was in 1987 or 27 years ago.  The S&P 500 closed at its calendar year high during the month of December in 14 of the last 23 years, i.e., 1991-2013 (source: BTN Research).
  3. LOOKING BACK – The S&P 500 bottomed at 102 on 8/12/82 (32 years ago) before beginning a bull market run that lasted more than 5 years until the stock market crash of October 1987.  During the bull market, the S&P 500 more than tripled in value.  The stock index begins today (8/04/14) at 1925 (source: BTN Research).
  4. SEEN MUCH WORSE – The S&P 500 fell 2.0% (total return) on 7/31/14, its 4th worst trading day of calendar year 2014.  During the 2 months of August and September 2011, the S&P 500 suffered through 11 trading days that were worse than the 2.0% loss that stock investors experienced last Thursday (source: BTN Research).
  5. TIME IN THE STOCK MARKET – If you selected any single month at random to invest (at the close of the prior month) in the S&P 500 during the 20-years ending 6/30/14, you achieved a positive total return +66% of the time.  If you extend your investment time horizon to 1 year, you achieved a positive total return +77% of the time.  If your time horizon was 5 years, you achieved a positive total return +73% of the time (source: BTN Research).
  6. LEND IT OUT – The ¼ of 1% that the Fed currently pays US banks on the $2.517 trillion of excess reserves they hold at the 12 regional Fed banks is equal to $17.2 million in daily interest (source: Federal Reserve).
  7. IN THE YEAR 2033 – Social Security trustees announced on 7/28/14 that the trust fund backing the payment of Social Security benefits would be zero in 2033.  A zero trust fund does not mean the payment of Social Security benefits would also go to zero, but rather would drop to 77% of their originally promised levels through the year 2088.  When the trustees released their report in 2007 (i.e., 7 years ago), the Social Security Trust Fund was projected to be depleted in 2041 (source: Social Security Trustees).
  8. LONG-TERM ISSUE – The estimated Social Security shortfall today (i.e., a present value number) between the future taxes anticipated being collected and the future benefits expected to be paid out over the next 75 years is $10.6 trillion.  The entire $10.6 trillion deficit could be eliminated by either an immediate 2.83% increase in the combined Social Security payroll tax rate (i.e., from 12.40% to 15.23%) or an immediate 17.4% reduction in Social Security benefits that are paid out to current and future beneficiaries (source: Social Security Trustees).
  9. MEDICARE – Per a 7/28/14 report, the Medicare trust fund supporting Medicare Part A (hospital coverage) is projected to be depleted by 2030.  The long-term (75-year) present value shortfall in the trust fund however could be corrected by an immediate 0.87% increase in combined Medicare payroll taxes, i.e., from the current 2.90% to 3.77% or an immediate 19% reduction in Medicare expenditures (source: Medicare Trustees).
  10. DISABILITY BENEFITS – The trust fund backing Social Security’s Disability program has been projected (as of the program’s 7/28/14 annual report) to be depleted in just 2 years (2016) at which time disability payments would be reduced to 81% of their originally promised levels (source: Social Security 2014 Trustees Report).
  11. FIFTY YEAR BOND? – The US government is soliciting indications of interests in Treasury bonds with maturities longer than 30 years.  Mexico offered a 100-year bond in March 2014 (source: BTN Research).
  12. A BETTER WAY – Almost 3 in 4 Americans (72%) that have inherited assets from deceased parents plan on handling the disposition of their wealth differently than the way their parents transferred assets (source: UBS).
  13. MOST ARE UNPREPARED – Just 5% of Americans currently on Medicare have retirement savings of at least $1.11 million.  50% have savings less than $61,400 (source: Kaiser Family Foundation).
  14. IMPACTING THOUSANDS – Detroit filed for Chapter 9 bankruptcy protection on 7/18/13.  Judge Steven Rhodes will preside over the city’s bankruptcy trial, scheduled to begin on 8/21/14 (source: The Detroit News).
  15. WE DON’T TALK – The Angels and the Astros have not conducted a baseball trade between the 2 teams since April 1981 (33 years ago), the longest stretch of “no trades” between 2 teams in baseball today (source: MLB).


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