The Investment U E-Letter #320
Tuesday, March 16, 2004

Can You Answer These 10 Questions for Extraordinary Investing?
By Dr. Steve Sjuggerud
President, Investment U

Last week’s three-day Investment U seminar in Delray Beach, FL, was sold out almost a month in advance.

It was our most successful gathering ever, both in terms of the number of attendees (more than 200) and number of profitable ideas that got exchanged (countless, I’d say).

So what brought 200-plus people to this conference from around the world? Well, they came to hear those profitable ideas from speakers like Alexander Green and Porter Stansberry - particularly their latest stock recommendations.

But I believe they also came to be challenged. Because challenging yourself is the only way to sharpen your investing skills for the long run.

Challenging Yourself… For Profits

That’s why part of the seminar was to challenge attendees’ knowledge of the markets, to give them a gauge of where they are at with their personal knowledge. We did it with a multiple-choice test.

I’ve selected 10 questions from that test that I consider the most fundamental ones. They’ve all been covered at one time or another in this e-letter, at the Investment U seminars or in the Investment U Course.

Here they are. See how you do. (Answers are at the bottom.)

1. If your investment is growing at 6% a year, how long will it take you to double your money?

a) 6 years
b) 12 years
c) 7 years
d) 20 years

2. The S&P 500 Index has risen at a ____annualized rate since 1927.

a) 10%
b) 12%
c) 15%
d) 6%

3. __________________ have (has) a much larger impact on your investment performance than which individual stocks you pick.

a) Trailing stops
b) Bond prices
c) Asset allocation
d) Investor sentiment

4. Let’s say you own a bond that pays you 5% in interest a year. If interest rates rise to 7%, your 5% bond is worth _____.

a) More, since bond prices rise as interest rates rise
b) Less, since bond prices fall as interest rates rise

5. Which of the following is most correct? If you double a penny every day for a month, you’ll have _____________ at the end of that month.

a) Less than $10
b) Less than $1,000
c) Less than $1,000,000
d) More than $10,000,000

6. When interest rates rise, stocks ____________.

a) Are nearly always a great buy
b) Appear expensive
c) Become relatively more attractive
d) Become relatively less attractive

7. ______ are an easy way to invest in real estate without the hassles of being a landlord.

a) ETFs
b) MITTs
c) REITs
d) LLCs

8. If you have $30,000 in your total portfolio, having $_____ AT RISK on one position is the most sensible choice below.

a) 6,000
b) 3,000
c) 1,500
d) 300

9. You should sell a stock if:

a) It hits your predetermined sell point
b) The reason you bought it is no longer there
c) It hits a three year high
d) You need to average down
e) Both A and B are correct
f) Both A and C are correct

10. One guaranteed way to protect yourself from inflation is to:

a) Bury dollar bills in your yard
b) Buy TIPS
c) Buy government-guaranteed savings bonds
d) Buy jumbo CDs

(ANSWERS: 1 - b 2 - d 3 - c 4 - b 5 - d 6 - d 7 - c 8 - d 9 - e 10 - b )

Now here’s a quick way to score yourself based on the number of answers you got right - even if it is a little “unscientific,” I think you’ll get the idea

10: Investment Senior - You’re the big man (or woman) on campus
8-9: Investment Junior - You’re nearly ready for the real world
6-7: Investment Sophomore - You’re a lot of fun to talk to at parties
3-5: Investment Freshman - Let the hazing begin!
0-2: Dear applicant - We thank you for your interest, but we regret to inform you

So, how’d you do? If you scored 8 or above, I’d say you’re well ahead of the average investor. Anything below that, well, that’s why I write this e-letter Just keep at it, and the answers will come.

Good investing,

Steve

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