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Bill’s By The Number$

Posted by: Vanessa Guadiana | Posted on: May 2nd, 2016 | 0 Comments

  1. YEAR-TO-DATE – The total return of the S&P 500 through the first 4 months of 2016 (i.e., through Friday 4/29/16) is +1.7%, short of its +4.0% average return for the first 4-months over the last 25 years (1991-2015).  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. LOTS OF TAXES – The government is projected to collect tax receipts equal to 18.3% of “gross domestic product” during fiscal year 2016, higher than any fiscal year since 2001 (source: Congressional Budget Office).  
  3. LAST DECADE – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) has increased +51% in size in the last 10 years to $39.92 trillion as of 12/31/15 (source: Securities Industry and Financial Markets Association).
  4. UPWARD MOBILITY – Just 16% of college graduates who were born into families in the bottom 20% of wage earners remain in the bottom 20% of wage earners during their adult lives (source: Brookings Institute).
  5.  NO CHANGE – Since raising interest rates on 12/16/15 (its first hike in 9 ½ years), the Fed has held 3 additional meetings (including last week’s) where no further action has been initiated (source: Federal Reserve).
  6.  BORROWING MONEY – The Treasury Department auctioned off $175 billion of bills and notes last week (no long-term bonds were auctioned), the largest single week of auctions YTD.  There are 23 “primary dealers” responsible for underwriting US debt offerings.  Each of the banks is required to bid on a pro-rata basis on every US Treasury auction (source: Financial Times).
  7.  TAXES – 90% of American taxpayers pay more in payroll taxes (that support Social Security, Medicare and unemployment benefits) than they pay in federal income tax (source: Peter G. Peterson Foundation).
  8.  JUST A COUPLE LEFT – There were 60 AAA-rated companies by the rating agency S&P in 1980, a number that fell to 30 by 1995, then to 6 in 2008 and down to just 2 top-rated companies as of last week (source: S&P).
  9.  TO BE PRECISE – It was reported last week that the current bull market for the S&P 500 is now the 2nd longest bull in history at 7.15 years in length.  Technically, if the current bull fails to reach a new closing high (above its 5/21/15 record close of 2131) before suffering a 20% tumble, the bull’s length will be restated to 6.20 years (i.e., it ended on 5/21/15), the 3rd longest in history as opposed to the 2nd longest (source: BTN Research).
  10.  NOT AS MANY TODAY – In 2007 (the year before the global financial crisis began), 65% of Americans had money invested in the US stock market either through pre-tax accounts or post-tax accounts.  Today (2016), just 52% of Americans have money invested in the US stock market (source: Gallup).
  11.  THE MAGIC OF COMPOUND INTEREST – $1 growing at 8% on a tax-deferred basis will accumulate to $10.06 over 30 years.  $1 growing at 4% on a tax-deferred basis will accumulate to $3.24 over 30 years.  Thus, achieving a return 2 times as great will produce a balance more than 3 times as large over 30 years.  This mathematical 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).
  12.  PUTIN WANTS TO TURN THE CLOCK BACK – It has been 25 years since the Union of Soviet Socialist Republics (USSR), aka the Soviet Union, dissolved in 1991 and split into 15 separate countries including Russia, Ukraine and Kazakhstan (source: BTN Research).
  13.  AT THE STATE LEVEL – Legislation has been proposed in Illinois to increase their top marginal state income tax rate to 9.75% (from 3.75% currently) as a result of the state’s financial woes (Illinois has $7 billion in unpaid bills).  There are just 3 states nationwide with top marginal rates higher than 9.75% (source: Tax Foundation).
  14.  RECORD LOW – The lowest close ever for the 10-year Treasury note was 1.39% on 7/24/12.  10-year notes have been traded in the United States for 63 years since April 1953.  The 10-year note yield closed at 1.83% last Friday 4/29/16 (source: Treasury Department).
  15.  NOT AN EXACT SCIENCE – The 2016 NFL Draft was conducted last week in Chicago.  The top 2 picks (Jared Goff and Carson Wentz) were both quarterbacks.  Warren Moon (University of Washington) and Dave Krieg (Milton College) are 2 quarterbacks who rank in the top 20 in NFL history for regular season passing yards and both went undrafted following their college careers (source: NFL).
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