PHONE: 414-223-1099 TOLL-FREE: 1-800-236-1096
SEND US A QUESTION OR COMMENT FOR OUR NEXT SHOW

2016 Seminar Quiz – The Answers

2013-seminar-client

You’re cheating only yourself if you peek at the answers before you take the 2016 Investment Outlook Seminar Quiz. If you need to refresh your memory of what Bob Landaas, shared at the latest client seminar.

View the video of the seminar by clicking here.

Answers:

1) a. The Federal Reserve has not yet announced a rate increase in 2016, although their regularly scheduled meetings include two more this year – Nov. 1 and 2 and Dec. 13 and 14.

2) Corporate earnings and interest rates are what move stock prices over time. Led by the effects of low oil prices, year-to-year earnings have been negative for five consecutive quarters, but analyst forecasts for 2017 call for increases ranging between 11% and 14%.

3) b. Because of historically low interest rates, current stock valuations are not as pricey as they appear otherwise. Expectations for continued low rates support higher stock multiples. (For more information, please view Earnings, interest rates and valuations, a Money Talk Video from Brian Kilb.)

4) c. As Bob put it, he’s “more interested in where the goal line is.” Already, the Fed has lowered expectations for its eventual target for the overnight rate to 2.5% from around 4%. The current rate, set in December 2015, is between 0.25% and 0.5%.

5) d. Economists see bar and restaurant sales as a harbinger for consumer spending on more durable goods. Consumer spending makes up more than two-thirds of the U.S. gross domestic product.

6) a. Although companies have been flush with cash, they generally have preferred paying shareholders dividend and buying back stock instead of plowing money back into their business growth.

7) d. Bob noted that the only way to increase aggregate net worth is through higher productivity, which measures output per hour worked. He also pointed out that the rate of Americans working or looking for work has been stuck below 63% after peaking above 67% nearly 20 years ago.

8) c. Despite Fed efforts to normalize the level of inflation, the core Personal Consumption Expenditures index has shown the annual inflation rate staying below 2% since 2008.

9) a. Historical models assumed an interest rate of 5%, resulting in higher returns from bonds. The 10-year Treasury has had an average monthly yield of 5% or more just twice in the last 10 years.

10) b. As Bob explained, assuming an 8% annual return on stocks and 3% on bonds would result in a 6% total return each year on a portfolio of 60% stocks and 40% bonds. That 6% total return would allow for a 4% annual withdrawal and a 2% reinvestment for inflation. (For more information, please view Safe investment withdrawals for retirees, a Money Talk Video from Art Rothschild.)

Photo by Reuben Neese

(initially posted September 29, 2016)

Send us a question for our next podcast.

More information and insight from Money Talk

Money Talk Videos

Follow us on Twitter.

Landaas newsletter subscribers return to the newsletter via e-mail.


Text Size:  A  A  reset

No client or potential client should assume that any information presented or made available on or through this website should be construed as personalized financial planning or investment advice. Personalized financial planning and investment advice can be rendered only after engagement of the firm for services, execution of the required documentation, and receipt of required disclosures.
Landaas & Company performs investment advisory services only in those states where it is licensed, or excluded or exempted from state investment advisor licensing requirements. All responses to inquiries made by prospective customers to this internet site will not be made absent compliance with state investment advisor and investment advisor rep licensing requirements, or applicable exemptions or exclusions from licensing.
Please contact the firm for more information.
MEMBER FINRA MEMBER SIPC MSRB REGISTRANT

Powered By: mindspike design
ADDRESS: 411 E. WISCONSIN AVENUE, 20TH FLOOR MILWAUKEE, WI 53202
© 2024 Landaas & Company