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2010 Seminar Quiz – The Answers

Test your knowledge from the 2010 Investment Outlook Seminar

1. Although the housing crisis is nationwide, just six states account for the majority of foreclosures. Name them.

Arizona, California, Georgia, Florida, Michigan, Nevada

2. List the order in which these three tend to recover coming out of an economic downturn.

Typically, first the markets recover. Then the economy. Then jobs. Given the extent of the latest downturn – the longest and deepest since the Great Depression – unemployment rates are projected to get no lower than 9% through 2011.

3. Consumer spending accounts for what percent of U.S. Gross Domestic Product?

About 70%. That’s why economists are concerned about the effects of high unemployment on consumer confidence. If American consumers aren’t willing to spend, economic recovery becomes a tougher slog. 

4. Primarily, what two things move stock prices?

Interest rates and earnings.

5. Which number is bigger – 6.8% or 2.7%

It’s not a trick question. The answer is 6.8%, which Bob Landaas, president of Landaas & Company, noted was the earnings yield on the Standard & Poor’s 500 Index in mid-September, compared to the yield then of 2.7% on the 10-year U.S. Treasury note.

6. When are stock earnings projected to get back to pre-crash highs?

b. Mid 2011
That’s when securities analysts surveyed by Bloomberg expect the earnings per share for the Standard & Poor’s 500 Index to be back where they were before the markets collapsed in 2008. That doesn’t necessarily mean that stock valuations will recover by then, but forecasters are counting on earnings to have rebounded.
initially posted Oct. 12, 2010


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