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2022 Investment Outlook Seminar Quiz

Dollar Puzzle

To reinforce some of the lessons offered in the 2022 Investment Outlook Seminar, we’ve curated 10 multiple-choice questions based on conversations among investment advisors. The answers are at the bottom of the page and include links to more information.

View the 2022 Investment Outlook Seminar.

1.

After advising investors, “Don’t fight the Fed,” which of the following did Bob Landaas say?

(Choose one of the following.)

  1. The Fed has nothing to do with earnings and interest rates.
  2. When the Fed is raising rates, be careful. When the Fed is done raising rates and then lowering them, stocks tend to do a little better.
  3. The Fed has too much power.
  4. The financial markets tend to respond – predictably and almost immediately — however the Fed guides them.

(See answer below.)

2.

Looking at their balanced portfolio in a bear market should remind investors why they include bonds in their holdings, Bob said. What reason did he give for owning bonds?

(Choose one of the following.)

  1. Bonds never lose value.
  2. Bonds offset stock sell-offs because bond values always go up when stocks go down.
  3. Bonds provide relatively stable assets for near-term spending needs, allowing stocks time to recover.
  4. Bonds tend to generate total returns in the long run that at least keep pace with inflation.

(See answer below.)

3.

Kyle Tetting talked about a possible “soft landing” for the U.S. economy following the Fed’s aggressive interest rate increases. What did he say should give the Fed “more runway” so it doesn’t crash the economy into recession?

(Choose one of the following.)

  1. The worst of the COVID pandemic appears to be over.
  2. Labor indicators and other data suggest the U.S. economy remains relatively robust.
  3. Russia’s war against Ukraine is distracting attention from global economic concerns.
  4. Analysts are still projecting growth in corporate earnings of 7% or more in 2022 and in 2023.

(See answer below.)

 4.

The U.S. dollar’s strength against other currencies can be a challenge to multinational corporations based in the U.S., Bob explained. What was the reason he mentioned?

(Choose one of the following.)

  1. Companies have to discount items they sell abroad to make them more affordable.
  2. Companies risk losing U.S. market share to cheaper imports.
  3. Companies lose U.S.-based executives who want to relocate overseas, where their salaries are worth more.
  4. Companies lose value on money made abroad as it’s repatriated to dollars.

(See answer below.)

5.

Steve Giles noted that one asset class in particular has beaten inflation in the long term, suggesting investors keep holding it in bear markets. What investment did he refer to?

(Choose one of the following.)

  1. Cash
  2. Stocks
  3. Bonds
  4. Real estate

(See answer below.)

6.

The Federal Reserve has two key mandates from Congress, as Dave Sandstrom explained. What did he say they are?

(Choose one of the following.)

  1. Lowering interest rates and raising interest rates
  2. Fighting inflation and keeping the government solvent
  3. Selling Treasury securities and balancing the federal debt
  4. Maximizing employment and stabilizing prices

(See answer below.)

7.

Most notably, the Fed raises and lowers short-term interest rates, but Dave also explained its practices of quantitative easing (and quantitative tightening) to try to boost or slow the economy. What did Dave say those practices involve?

(Choose one of the following.)

  1. Discounting (and raising) the fees banks pay to borrow money
  2. Buying (and selling) bonds on the open market
  3. Accelerating (and slowing) the printing of money at the Bureau of Engraving
  4. Expanding (and contracting) the hours at which Federal Reserve Banks lend money

(See answer below.)

8.

Bond values have fallen as interest rates have risen, but Kendall Bauer explained how long-term investors can benefit from a “laddered approach” used by bond fund managers. What does that entail?

(Choose one of the following.)

  1. Staggering maturity dates so they have frequent opportunities to buy new bonds paying higher rates.
  2. Waiting until they think rates are near the top and then buying as many bonds as they can.
  3. Timing bond sales so that with each rate increase they cash out more of the fund.
  4. Cashing out with each rate increase and using the proceeds to buy either new bonds or value stocks.

(See answer below.)

9.

In explaining the changing conditions for value stocks and growth stocks, Paige Radke noted that growth stocks typically cost more compared to their earnings. As Paige explained, what trait do growth stocks share that makes them appeal to investors?

(Choose one of the following.)

  1. They tend to grow their dividends quicker than value stocks.
  2. They’re expected to grow their earnings more in the long run.
  3. Their earnings growth typically is more resilient during recessions.
  4. At higher valuations relative to value stocks, growth tends to be less volatile.

(See answer below.)

10.

Rising interest rates, high inflation and a slowing economy tend to favor which class of stocks more in the short term, as Paige explained?

(Choose one of the following.)

  1. Value
  2. Growth
  3. Both
  4. Neither

(See answer below.)

Answers

1.

b. When the Fed is raising rates, be careful. When the Fed is done raising rates and then lowering them, stocks tend to do a little better.

Learn more
How bonds fared as Fed has raised rates, a Money Talk Video with Kyle Tetting
Be patient holding bonds as rates rise, a Money Talk Video with Steve Giles

2.

c. Bonds provide relatively stable assets for near-term spending needs, allowing stocks time to recover.

Learn more
What to know about bear markets, a Money Talk Video with Steve Giles
Investment balance: Find and keep, a Money Talk Video with Art Rothschild

3.

b. Labor indicators and other data suggest the U.S. economy remains relatively robust.

Learn more
Finding direction in the fundamentals, by Kyle Tetting
How to handle fears of recession, a Money Talk Video with Bob Landaas and Kyle Tetting

4.

d. Companies lose value on money made abroad as it’s repatriated to dollars.

Learn more
Over there: Investing in a global economy, a Money Talk Video with Kyle Tetting
International Investing, from the Securities and Exchange Commission

5.

b. Stocks

Learn more
Stocks: Long-term, consistent returns, a Money Talk Video with Dave Sandstrom
Safe investment withdrawals for retirees, a Money Talk Video with Art Rothschild

6.

d. Maximizing employment and stabilizing prices

Learn more
Investors and the business cycle, a Money Talk Video with Dave Sandstrom
Follow the Fed with interest, a Money Talk Video with Bob Landaas

7.

b. Buying (and selling) bonds on the open market

Learn more
What Is Quantitative Tightening? by the Federal Reserve Bank of St. Louis
Federal Reserve Holdings: What to know, a Money Talk Video with Marc Amateis

8.

a. Staggering maturity dates so they have frequent opportunities to buy new bonds paying higher rates.

Learn more
Smart Bond Investment Strategies, from the Financial Industry Regulatory Authority
Get the total picture of your investments, a Money Talk Video with Paige Radke

9.

b. They’re expected to grow their earnings more in the long run.

Learn more
Value & Growth: Going Deeper, a Money Talk Videos with Brian Kilb and Marc Amateis
Investor trade-off: Risk vs. return, a Money Talk Video with Paige Radke

10.

a. Value

Learn more
The outlook for value in your portfolio, a Money Talk Videos with Kyle Tetting
Dividend-paying stocks in your portfolio, a Money Talk Videos with Steve Giles

PREVIOUS MONEY TALK QUIZZES
(initially posted Oct. 29, 2022)

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