Good news is always welcome. Just days from the pronouncement of the expert panel at the annual CFA Forecast Dinner, the market performed as predicted and hit an all-time high.
Kathleen Hays of Bloomberg Radio moderated again this year, much to the delight of the audience. Food and atmosphere at Jackson Country Club met our usual high expectations. While we dined, we listened to a panel of experts address the economic and financial concerns of the day. On the panel were Bill Fries, equity expert; Jeff Tanguis, fixed-income expert; and Tony Crescenzi, economic expert from PIMCO. Repeat audience members agreed this was the most optimistic forecast since 2008.
The housing market is recovering. The improvements are here to stay as we see vacancy rates declining while new buyers enter the market. Immigration reform could add to the growth as immigrants add to the pool of first-time home buyers. Any investment with connections to the housing market should do well this year.
Sequestration was a given on that night. The cuts to government spending are expected to reduce GDP by ½ percent this year should they stay in place. Some panelists think the event will be short-lived, though, as Congress comes to grips with the effects. Regardless, the market has assumed some eventual compromise and is, basically, ignoring the D.C. drama.
The real problem in our budget is the $86.5 trillion in promises made to senior citizens. If this is not addressed, this will hurt economic growth in the U.S. and the developed world.
Europe is still a concern. EU citizens don’t like austerity. The cultural differences across various countries are hampering a proper political union.
Hyperinflation in the U.S. is not a concern. The Federal Reserve can “change its mind” and ratchet down their printing business.
Energy independence in the U.S. is a “real possibility.” Between new technology and new discoveries, we could be independent within six years. Tanguis, a Louisiana resident, pointed out the low unemployment in his state due to the energy business.
Ultimately, all agreed investors must be more selective, looking for opportunities within certain businesses expected to benefit from the next wave of good news.
» Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is firstname.lastname@example.org, and her website is www.newper.com.