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Money Talk Quiz, March 2022

Dollar Question

Through conversations with clients, discussions during the weekly Money Talk Podcast and articles on the Money Talk page, Landaas & Company advisors offer insights into the ever-changing financial markets. They help long-term investors make sense of what is going on and what it means to their portfolios. To see if you’re paying attention, try to provide the context for a sample of what advisors have talked about recently.

1.

“It’s one of those reminders that if you could just close your eyes and go away for a couple of years, you’d be completely unaware of the ride that you took. But over a long period of time, it tends to be earnings growth which drives your return as a stockholder.”

When Chris Evers said this in the Feb. 4 Money Talk Podcast, what specifically was he  referring to?

(Choose one.)

  1. The decline of average weekly COVID cases to levels last seen before the delta variant
  2. The fact that both market valuations and the yield on the 10-year Treasury had returned to where they were just prior to the COVID pandemic
  3. The recovery of both GDP and the unemployment rate from where they were just before the pandemic
  4. The Rip Van Winkle elements of the movie “Groundhog’s Day”

(See correct answer below.)

2.

“When you’re raising rates, it’s typically because the economy is doing extremely well — and almost too well in most instances, you’re overheating.”

Dave Sandstrom made that statement in the Feb. 11 Money Talk Podcast to help explain which of the following?

(Choose one.)

  1. Why expected interest rate increases by the Federal Reserve could trigger an economic recession
  2. Why the Federal Reserve is not likely to raise interest rates more than three times in the next year
  3. Why financial markets have tended to respond positively to overall cycles of Federal Reserve interest rate increases
  4. Why Federal Reserve interest rate increases historically have triggered long-term sell-offs in financial markets

(See correct answer below.)

3.

“You have to keep that long-term perspective, and just because you have some fear right now, you’ve got to stay diversified.”

In addressing investor anticipation of interest rate increases on the Feb. 11 Money Talk Podcast, which of the following did Paige Radke suggest investors not do?

(Choose one.)

  1. Listen to what the Fed is saying.
  2. Be concerned about surprises from the Fed, such as sudden lapses in transparency.
  3. Overweight inflation-protected securities, short-term bonds and cash.
  4. Lean into funds that are actively managed.

(See correct answer below.)

4.

“You aren’t just stuck with a bond that matures in five or six years in an intermediate bond fund. You’ve got bonds maturing probably every day in a lot of these bigger funds. And as those portfolio managers are out there shopping, all of a sudden, they’re finding bonds that have a higher interest rate than they did before.”

Kyle Tetting made that point in the Feb. 18 Money Talk Podcast as part of his explanation for which of the following?

(Choose one.)

  1. Why investors shouldn’t necessarily abandon intermediate bond funds amid recent and expected rate increases
  2. Why investors should divert more to cash and short-term bonds
  3. Why timing the bond market is relatively easy
  4. Why falling stock prices could help bond investors

(See correct answer below.)

5.

“On the heels of what I think was just a garden-variety correction in the stock market because of higher interest rates, we’re going to look at probably a little bit longer period of time before inflation really comes down.”

Which of the following prompted this observation by Bob Landaas in the Feb. 25 Money Talk Podcast?

(Choose one.)

  1. Midterm elections tend to politicize inflation and make price trends seem worse or better than they objectively are.
  2. Russia’s invasion of Ukraine could possibly add to inflation challenges by affecting the prices of food and energy and further disrupting supply chains.
  3. Expectations have softened for initial interest rate increases by the Federal Reserve Board in March.
  4. The lifting of more mask mandates will likely heighten consumer demands before supply chains have normalized.

(See correct answer below.)

Answers

1.

b. The fact that both market valuations and the yield on the 10-year Treasury had returned to where they were just prior to the COVID pandemic

Learn more
Stocks: Long-term, consistent returns, a Money Talk Video with Dave Sandstrom
Earnings, interest rates and valuations, a Money Talk Video with Brian Kilb
Stock up for the long haul, by Dave Sandstrom

2.

c. Why financial markets have tended to respond positively to overall cycles of Federal Reserve interest rate increases

Learn more
Broader views of market movementsa Money Talk Video with Dave Sandstrom and Kyle Tetting
Interest rate matters for investors, a Money Talk Video with Brian Kilb
Earnings yield: Valuing stocks vs. bonds, a Money Talk Video with Kyle Tetting

3.

c. Overweight inflation-protected securities, short-term bonds and cash.

Learn more
Wondering where your portfolio fits, by Kyle Tetting
Why investments outperform their investors, a Money Talk Video with Kyle Tetting
Staying the course is not staying still, by Kyle Tetting
Selections important to your investments, a Money Talk Video with Kyle Tetting

4.

a. Why investors shouldn’t necessarily abandon intermediate bond funds amid recent and expected rate increases

Learn more
Be patient holding bonds as rates rise, a Money Talk Video with Steve Giles (2018)
Total return: Your full investment picture, a Money Talk Video with Paige Radke
Tips Before You Invest in Bonds, from the Financial Industry Regulatory Authority

5.

b. Russia’s invasion of Ukraine could possibly add to inflation challenges by affecting the prices of food and energy and further disrupting supply chains.

Learn more
Inflation: Nuances matter for investors, by Kyle Tetting
Yuletide logjams: Economy hits holidays, by Joel Dresang
Uneven recovery suggests balance, by Kyle Tetting
Stocks offset fears of inflation over time, by Joel Dresang
Key economic indicators every investor should know, from the Financial Industry Regulatory Authority

PREVIOUS MONEY TALK QUIZZES
Money Talk Quiz, February 2022
Money Talk Quiz, January 2022

Money Talk Quiz, November 2021
Money Talk Quiz, September 2021
Money Talk Quiz, August 2021
Money Talk Quiz, July 2021
Money Talk Quiz, June 2021
Money Talk Quiz, May 2021
Money Talk Quiz, April 2021
(initially posted March 4, 2022)

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