SHERIDAN — A nationally renowned economist appeared at the WYO Theater on Tuesday night and presented his interpretation of current market trends along with an educated guess of what lies ahead for investors.
Chief Investment Strategist for D.A. Davidson & Company Fred Dickson presented his 2014 forecast in conjunction with a recap of the last year’s economic conditions.
Dickson has been a regular guest to Sheridan for an annual address sponsored by D.A. Davidson as a courtesy so clients know what to expect from their investment portfolios in the coming months. This year’s presentation was also open to the public.
“What we saw last year was we found that the economy continued to grow,” Dickson began, indicating growth in the first half of the year was slow, but momentum picked up during the second half despite the partial shutdown of the federal government.
“The last quarter, the economy posted its 15th consecutive all-time level of growth activity. Fifteen quarters in a row — amazing,” he said. “When we go back and slice down from big businesses to small businesses, we go back and what we find is that companies, at this point, are producing record revenues, record earnings.”
Dickson said government revenues are also on the rise after a significant decline in recent years, and that economic activity including auto and home sales, industrial and energy production and commodities are making a comeback.
Dickson then the audience to indicate by a show of hands those who have seen evidence of a thriving economic atmosphere. When no one raised their hands, Dickson said the response was typical, and explained the perception that the economy is lagging likely stems from only modest decreases in unemployment and slow job growth.
Dickson said record revenues coupled with a sluggish job market can be explained by several collaboration factors.
“The answer is people have learned how to work smarter, harder, longer and better. A lot of people have realized they could have been doing a lot more at their jobs for a lot more years,” he said.
Dickson also said employers are gravitating toward mechanical and technical labor sources.
“We’ve seen the technologies take over and aid so companies, at this point, can fill and produce things or deliver services without by having technology in some cases substitute for manpower.”
Dickson said that though most economic parameters are nearing pre-recession levels, consumer confidence is uncharacteristically low, likely because of the psychological wounds created by the bursted housing bubble and the massive job losses that followed.
He said the past year’s business climate was one of uncertainty.
“There were so many changes in policy. Companies didn’t know what their taxes were going to be. They still don’t know what their healthcare policy is going to be. That’s caused them to slow down and put on hold hiring and expanding their businesses,” Dickson said.
Dickson said he expects to see high-level policymakers stabilize their decisions to make for a steady upward path for most investor profits, especially for diverse portfolios.
“This year, the market is going to have to grow on the strength of its earnings. We do not expect to see much growth in terms of the exuberance or willingness of investors to pay a premium for future earnings growth versus where we are now,” he said.
Dickson also identified “Hot Spots” he recommends to investors for the upcoming year. He predicts growth in technology-based social media, security, and mobile computing. Other sectors expected to expand greatly in the coming year include biotechnology, robotics, logistics, electronic gaming, online education and e-commerce.