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2016 Investment Outlook Seminar Quiz

Seminar 2013

See how much you were paying attention to Bob Landaas at the latest client seminar. Or, if you weren’t there, learn what you missed.

Click here for the answers – AFTER you take the quiz.

View our video of the seminar by clicking here.

1) Which of the following has NOT happened so far in 2016?

  1. The Federal Reserve announced another rate increase.
  2. The stock market had its worst start to a year.
  3. Stocks set record highs.
  4. The yield on the 10-year Treasury note set a record low.

2) Name the two fundamental determinants of whether stock prices go up or down over the long run.

3) Interest rates act as a discount mechanism for determining the current value of stocks, so continued low interest rates suggest …

  1. … it’s time to load up on bonds.
  2. … recent price-earnings ratios compare more favorably to historic averages.
  3. … stocks are pricier than they seem.
  4. … the Federal Reserve’s monetary policy is succeeding.

4) Since the Federal Reserve raised short-term interest rates in December 2015, financial media have anxiously anticipated the next increase. Bob says he’s not as concerned about when as he is about …

  1. …why it’s taking so long.
  2. …whether the Fed’s decision is unanimous.
  3. …how high and how rapidly the Fed plans to push rates.
  4. …Fed Chair Janet Yellen’s comments afterward.

5) Between June of last year and June of 2016, U.S. consumers saved an estimated $3.6 billion from lower gas prices. What did they do with $2.5 billion of it?

  1. invested in bank CDs
  2. bought foreign-made trucks
  3. added to their savings accounts
  4. spent it in bars and restaurants

6) As measured by gross domestic product, the U.S. economy has never been bigger. Which of the following has NOT been a strong contributor to economic expansion?

  1. Business investments
  2. Consumer spending
  3. Employment
  4. Housing

7) Which of these does Bob see as a possible drawback for further U.S. economic growth?

  1. Employment and wage growth
  2. Retail sales
  3. Likely dissipating drag of strong dollar and lower oil prices
  4. Rates of productivity and labor force participation

8) Eight of the last 10 recessions followed Fed rate tightening to control runaway inflation. Why doesn’t that worry Bob at the moment?

  1. The Fed has other distractions, such as China.
  2. The Fed doesn’t have as much control as it used to.
  3. Inflation has been staying below the Fed’s target rate of 2%.
  4. Since the last recession, inflation has settled into a normal range.

9) For decades, the Efficient Frontier suggested investors could optimize the tradeoff between risk and return with a portfolio of about 50% stocks and 50% bonds. Why is Bob saying that a stock/bond split closer to 60/40 is more appropriate?

  1. Low interest rates have required a higher stock exposure.
  2. Greater globalization has made stocks riskier.
  3. More advanced theories have discredited the Efficient Frontier.
  4. The 60/40 split accounts for tax changes.

10) Which of the following is NOT a reason for a 4% annual withdrawal strategy from a portfolio that’s 60% stocks and 40% bonds?

  1. That withdrawal rate should allow 10 years (40 divided by 4) of distributions from investments that are relatively safe from stock sell-offs.
  2. That withdrawal rate should allow you to double your principal investment amount in 18 years.
  3. Based on historical returns for stocks and bonds, the 60/40 portfolio could afford the annual withdrawal without depleting the principal.
  4. Based on the average length of a stock market recovery, you shouldn’t have to sell stocks in a downturn.
Click here for the answers – AFTER you take the quiz.
Photo by Reuben Neese
(initially posted September 29, 2016)

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