Typically, the financial advisers entrusted with managing Lowndes County’s hospital trust fund present their findings in a clear, dispassionate manner during their semi-annual reports to the county supervisors.
Brian Bush of Stephens Capital Management departed from that script Wednesday.
“Happy Halloween,” Bush said as he began his presentation. “October has proven to be a pretty scary month.”
A short time later, Allyson Youngblood of Renasant Wealth Management greeted supervisors in a similar tone.
“We’ve got about five hours left until trading for the month of October ends,” she said. “It can’t come quick enough.”
Both comments elicited knowing chuckles from the supervisors, who have watched the value of their stock holdings dip precipitously during a month when the market lost $2 trillion in value.
Despite a Wednesday rally, NASDAQ lost 9 percent of its value over the course of the month, its biggest monthly drop since November 2008. The S&P 500 (down nearly 7 percent) and the Dow (down 5 percent) saw their worst months in years, too.
The effect on the county’s $32.5-million trust fund was a $1.3 million hit as a result of the awful October trading.
Even amid those sobering reports, both Bush and Youngblood said there remains reason for optimism going forward.
“We’re in the second longest bull market in history,” Bush said. “Bull markets don’t last forever and there is going to be a recession. But we’re not seeing anything that leads us to believe there is going to be a recession any time in the foreseeable future. It’s probably at least nine to 12 months in the future.”
Bush citied strong consumer confidence, steady GDP growth, low unemployment and steady corporate earnings as evidence that October’s performance was a market correct rather than the leading edge of a recession.
Youngblood agreed.
“October was a bad month, no question,” she said. “There was a lot of uncertainty. Right now, we’re looking at 17 different things that the markets are uncertain about, including the mid-term elections. But that’s not uncommon in mid-term election years.”
Youngblood said recent history favors a year-end rebound.
“Over the last 10 years, 90 percent of the time the market has been up by an average of 7 percent in November and December,” she said.
But it’s that one year in 10 that supervisors remember.
Each year, the county can withdraw up to 3 percent in trust fund profits based on the value of its stock holdings as of Dec. 31, while it must leave the principal untouched.
In 2016, a notable dip in the market in November and December wiped out much of the fund’s profits. By Dec. 31 of that year, there was just $73,000 in profits available to be withdrawn from the fund.
In the four other years, the county could have withdrawn an average of $900,000.
Even so, the county’s exposure to the whims of the market is limited. Only 40 percent of the trust fund is invested in equities. The balance of the fund is held in bonds, which have grown slightly, and cash.
“Despite what’s happened in October, the fund is still in good shape,” Bush said.
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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