Womack Investment Advisers

Companies with small market capitalization’s, so-called “small caps”, have traditionally acted as a “canary in the coal mine” for the larger market since they tend to be more domestically focused and more sensitive to growth worries than their larger cap counterparts.   Given that, Andrew Lapthorne, analyst at Societe Generale, is concerned that small cap companies have been taking on a massive amount of debt over the last few years, far   outstripping their earnings growth (EBITDA on the chart below) and greatly increasing their balance sheet leverage.   Lapthorne notes, “If you have leverage and your share price is weak, that compounds the problem.”   And a small company with balance-sheet problems can’t do what the big boys do — raise money by going back to the markets with bond issues, he notes.

There’s no shortage of recent news stories covering the shrinking of the “middle class”.  But what exactly is the “middle class”, and who is in it?  According to a study by the Pew Research Center, it turns out that the definition of “middle class” varies greatly, and that “household size” is a major factor in the definition.  Research website howmuch.net took the Pew data and plotted family size against income range, showing graphically how rising family size causes the income range definition of “middle class” to climb higher and higher.

   Every year brings unexpected events. Here are a few remarkable stories you may have missed in 2018: Abuzz in NYC “…a menacing horde of honeybees descended on a hot dog vendor’s umbrella, bringing Times Square to a standstill and drawing swarms of gawking tourists. After a brief flurry of excitement, the buzzing interlopers were apprehended by a police officer armed with a vacuum cleaner-like device that sucked them up. The bees were then whisked away to safety.” --Reuters, December 17, 2018 Mostly indivisible “There's a new behemoth in the ongoing search for ever-larger prime numbers – and it's nearly 25 million digits long. A prime is a number that can be divided only by two whole numbers: itself and 1… We would write the number out for you, but it would fill up thousands of pages, give or take…” --NPR, December 21, 2018 Hoop dreams “Basketball is apparently being embraced by North Korea as a fundamental part of its ideology…‘Promoting basketb