2017 Investment Outlook Seminar – The Quiz
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.
(A link to the answers is at the bottom.)
1. Bob showed a gift presented to him by 10-year-old Brooklyn Becker. What was it?
- Red-white-and-blue potholders she had woven as a Girl Scouts project
- A miniature model she built of a 19th century Great Lakes sailing vessel
- Tooth fairy money she had saved to open an IRA
- A sign she had made out of Popsicle sticks
2. Bob cited a relatively rare occurrence as one of the bright spots for the U.S. economy now. He was referring to:
- The Federal Reserve Board’s lack of urgency to raise short-term interest rates
- Stock market indexes hitting all-time highs
- Synchronized global growth
- Record-high job openings amid 16-year low unemployment rates
3. Which one of the following IS NOT a reason to believe the second-longest bull market in history still can continue?
- Signs of a major top in the stock market are not apparent.
- Markets don’t die of old age.
- The earnings yield is greater than the yield on the 10-year Treasury note.
- Stocks have relatively high valuations.
4. Which is Bob’s preferred price-earnings ratio to use when valuing the stock market?
- Trailing P/E – price divided by the preceding 12 months of actual earnings
- Forward P/E – price divided by the 12-month forecast of earnings
- CAPE Ratio – a cyclically adjusted formula using 10 years of prior earnings
- None of the above
5. Which is the bigger number – 5.6 or 2.1?
6. Why would investment advisors obsess about inflation in the second half of a business cycle?
- They fear the Federal Reserve would raise interest rates.
- They fear the government would raise taxes.
- They fear investors would flock to bonds and sell all their stocks.
- They fear Congress would raise the debt ceiling.
7. Which of the following IS NOT a reason for inflation being so low for so long?
- Low unemployment
- Profound cost cutting by businesses
- A gig economy of temporary contract workers
- Robotics and artificial intelligence
8. Which of the following is NOT TRUE about growth stocks?
- They tend to have higher-than-average price-earnings ratios.
- They have outperformed value stocks by more than 3 percentage points in the last 10 years.
- They have outperformed value stocks in the last 20 years – and in the last 30 years.
- They tend to sink like rocks when the markets go down.
9. The yield curve has flattened since the Fed began raising short-term interest rates. What does that suggest to investors?
- It’s time to buy more long-term bonds.
- The markets anticipate continued moderate growth with low inflation.
- It’s time to buy more stocks.
- The markets are signaling the beginning of the end of the bull market.
10. Which of the following did Bob NOT SAY with this illustration of the efficient frontier?
- “It wouldn’t be a seminar unless I dragged this one out.”
- “If you get a whole lot past 60% in stock, your risk line keeps going up, but your return line tends to flattens out.”
- “I want to get paid for the risk I take. And if not, I don’t want to take the risk.”
- “I don’t know who’d be crazy enough to not be all in.”
Click here for the answers – AFTER you take the quiz.
(initially posted September 27, 2017)