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2014 Investment Outlook Seminar – The Answers

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Photo by Reuben Neese

Here are the answers to the 2014 Investment Outlook Seminar Quiz. (Thank you for not peeking ahead. Delayed gratification is its own reward.)

View our recording of the seminar by clicking here.

1) They are all true except d. Banks have remained reluctant to lend money, which relates to the next answer.

2) The answer is a. Although the Federal Reserve actions have made it cheaper for money to flow, in an effort to help the economy grow faster, circulation is below normal.

3) The dollar’s strength against other currencies dampens inflation by lowering commodity prices as well as the cost of imports. It also results in a flattened yield curve. All of that takes pressure off the Fed to raise interest rate. (Click here to read more.)

4) The answer is 3. Valuations are near their long-term averages. Markets don’t peak at average levels but at excesses.

5) The answer is b, which suggests that as interest rates increase eventually, bonds with shorter durations will suffer smaller movements.

6) Forecasts suggest inflation is still years away from hitting the Fed’s target.

inflation 2014

7) The answer is c. By various measures of wages, production capacity and commodities prices, inflation is not a near-term threat.

8) Some economists believe that the slow pace may mean a longer recovery and perhaps we have only
recently entered the growth phase.

9) The answer is interest rates and earnings.

10) The answer is c. But Bob suggests the next Fed rate increases to be more measured and telegraphed, as in 2004, rather than the abrupt approach that caught markets off guard in 1994.

As a prelude to Bob’s address, clients at the seminars viewed a new Money Talk Video that reviews events in the previous 12 months that have moved the markets. Please click here to see “The Year in Review” video.

Some 240 clients completed feedback forms at the seminars. We captured their responses for a computer-generated word cloud. Please click here to see the results.

(initially posted Oct. 7, 2014)

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