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Bill’s By The Number$

Posted by: Kim Vo | Posted on: May 1st, 2017 | 0 Comments

1. YTD PERFORMANCE – The total return of the S&P 500 for the first 4 months of 2017 (i.e., through 4/28/17) is +7.2%, north of its +3.5% average return for the first 4-months over the last 25 years (1992-2016). 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. THEIR FAVORITE OPTION – 34% of 1,019 Americans surveyed in early April 2017 picked real estate as the best long-term investment today. 26% selected stocks as their top long-term choice (source: Gallup).

3. SELL IN MAY? – In analyzing the S&P 500 since 1990, the 6-month periods ending on April 30th have beaten the 6-month periods ending on October 31st in 18 of 27 years, i.e., the 6-month periods that began on May 1st and November 1st from 1990 through and including 2016. The 6-month periods ending April 30th are up +638% (total return) vs. a +73% gain for the 6-month periods ending October 31st (source: BTN Research).

4. INFLATION RETURNS – Inflation (using the Consumer Price Index) has exceeded +2% on a year-over-year basis for 4 consecutive months through March 2017, the first time inflation has had such a streak since April 2012. The Fed’s annual inflation target is +2% (source: Department of Labor).

5. ABOVE THE MAX – Earnings up to $127,200 in 2017 are subject to payroll taxes. 90% of all earnings were subject to payroll taxes in 1983. Just 82% of all earnings are expected to be subject to payroll taxes in 2017. An estimated 79% of all earnings are projected to be subject to payroll taxes in 2027 (source: CBO).

6. LAST TWO DECADES – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) has increased +239% in size in the last 20 years to $39.4 trillion as of 12/31/16, equal to growth of +6.3% per year (source: Securities Industry and Financial Markets Association).

7. AFTER TAX REFORM – Following the 10/22/86 signing of the “Tax Reform Act of 1986,” the US economy grew by an average of +3.8% per year for the subsequent 3-years, i.e., 1987-88-89 (source: Department of Commerce).

8. GAMES THEY PLAY – The Congressional procedure of “reconciliation” (i.e., passage of a bill with a “simple majority” instead of a “three-fifths” majority) can be used only if the legislation has been “scored” to show that the bill will not increase the country’s deficit beyond 10 years. For this reason, past tax reform legislation has included tax changes that “expire” within a 10-year period of time (source: Congress).

9. AGING POPULATION – By 2030 (i.e., 13 years from now), the US could face a shortage of as many as 104,900 medical doctors, including 43,100 primary care physicians (source: Association of American Medical Colleges).

10. WHAT THEY WANT – Although 3 out of 4 American businesses (75.9%) would be interested in hiring a 2017 college graduate with an engineering degree, just 1 out of 20 college seniors (5.2%) are majoring in some form of engineering (source: National Association of Colleges and Employers).

11. FRANCE – The French economy is the 5th largest in the world. French voters will choose next Sunday 5/07/17 between Emmanuel Macron and Marine Le Pen. The winner’s 5-year term in office begins on Monday 5/15/17. Parliamentary voting (France’s Congress) takes place on 6/11/17 and 6/18/17 (source: BTN Research).

12. 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).

13. NICE NEIGHBORHOOD – The zip code with the highest median home value ($6.2 million) in the United States is 94027 in Atherton, CA, home to many Silicon Valley executives (source: Money).

14. COMMON FOLK – Just 1 in every 8 adult workers (13%) has both a defined contribution 401(k) plan and a defined benefit pension plan. All 535 members of the House and the Senate (100%) have both a defined contribution 401(k) plan and a defined benefit pension plan (source: Center for Retirement Research).

15. FROM WAY DOWNTOWN – Stephen Curry has a career shooting average of 44% on just his 3-point attempts. Pete Maravich, NBA star who played just one season with the 3-point shot (1979-80), had a career shooting average of 44% on 14,025 shots from the field over his 10-year career (source: NBA).

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