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Bill’s By The Number$

Posted by: Kim Vo | Posted on: March 23rd, 2020 | 0 Comments

1. GOOD AND THE BAD – Since 1950, the average bull market (64 months) has lasted more than 4 times as long as the average bear market (15 months). Since 1950, the average bull market has generated a gain of +172%. The average bear market has incurred a loss of 34%. 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. THE YEAR AFTER – The S&P 500 has achieved an average annual total return of +14.8% in the calendar year after the 16 down years that have taken place in the stock market over the last 75 calendar years (1945-2019). That result is +3.5 percentage points greater than the entire 75-year average annual return of +11.3% for the index (source: BTN Research).

3. “TIME IN” vs. “TIMING” – The split between “up” and “down” time periods for the S&P 500 from 1950 to the end of 2019, i.e., the last 70 years, as measured by: Days: 54% “up” and 46% “down”; Months: 60% up, 40% down; Quarters: 66% up, 34% down; Years: 73% up, 27% down; 5-Year Rolling Time Periods: 79% up, 21% down; and finally 10-Year Rolling Time Periods: 89% up, 11% down (source: BTN Research).

4. BIG GAIN, BIG LOSS – The US stock market has lost $12.1 trillion of value during the 2020 bear market, i.e., from the close of trading on 2/19/20 to the close of trading on Friday 3/20/20. The US stock market peaked at $36.1 trillion, having gained $28.5 trillion during the 2009-20 bull market through 2/19/20 (source: Wilshire).

5. MULTIPLIER – Senate Republicans announced on 3/19/20 a stimulus plan that includes $1,200 cash payments to taxpayers. If each taxpayer that received $1,200 had a “marginal propensity to consume” of 60%, the initial taxpayer would save $480 and spend $720, and then in turn the party that received the $720 would save $288 and spend $432, and the next party would save $173 and spend $259, and so on. Ultimately the original $1,200 cash payment would result in $1,800 of economic activity, i.e., $720 + $432 + $259 + . . . (source: BTN Research).

6. ALMOST INTEREST-FREE CASH – The Federal Reserve implemented its 2nd emergency rate cut this month last Sunday 3/15/20, effectively pushing short-term interest rates to zero. At the latest emergency meeting, the Fed also cut the reserve requirement for thousands of US depository institutions to zero effective Thursday 3/26/20, i.e., permitting easier lending by banks (source: Federal Reserve).

7. JOBS – There was a turnover of 5.615 million employees nationwide during the month of January 2020, comprised of 3.532 million employees who quit their jobs (63%), 1.684 million employees who were fired (30%) and 399,000 employees who retired, died or became disabled (7%) (source: Department of Labor).

8. SEVEN MONTHS – The worldwide flu outbreak that occurred in the fall of 1918 killed 50 million people globally, including 675,000 Americans. The health crisis was a primary cause of a 7-month recession in the USA that lasted from August 1918 through March 1919 (source: National Bureau of Economic Research).

9. WILL THIS BE ENOUGH? – There are 924,100 hospital beds in the United States (source: 2018 American Hospital Association survey).

10. NEED LOTS OF THESE FOLKS – The median annual income of physicians in the United States in 2019 was $199,500 (source: Current Population Survey).

11. GONE – 22 million workers worldwide lost their jobs as a result of the 2008 global financial crisis. Global job losses driven by the coronavirus pandemic are projected to be as few as 5.3 million (assuming swift and coordinated actions to contain the virus) to as many as 25 million (source: International Labor Organization).

12. HIGHER PRICE NEEDED – Saudi Arabia needs to sell oil at $78 a barrel to balance its sovereign budget, while Russia requires a price of $45 a barrel. Brent crude oil, the benchmark for the oil industry outside of the United States, closed last Friday 3/20/20 at $26.98 a barrel (source: International Monetary Fund).

13. AT THE PUMP – The national average price of gasoline has decreased for 23 consecutive days between Wednesday 2/26/20 and Friday 3/20/20, falling 30 cents a gallon to $2.17 a gallon (source: AAA).

14. BACKING MORTGAGES – Government agencies Fannie Mae and Freddie Mac serve as the financial backstop for $5 trillion of the $10.6 trillion of outstanding mortgage loans nationwide (source: Federal Reserve).

15. MORE GAMES – The NFL went from 12 regular season games to 14 games in 1961, then from 14 to 16 in 1978 and will increase from 16 to 17 games as early as the 2021 season (source: NFL Players Association).

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