The Investment U e-Letter: Issue # 414
Thursday, February 24, 2005
By Dr. Steve Sjuggerud, Advisory Panelist, Investment U
So, you've been reading the Investment U e-Letter for a while now. Your confidence as an investor is growing every day.
But how much have you really absorbed from these e-letters? Take this quick investing quiz to find out - while having some fun in the process. (Answers are at the bottom.)
Investing Quiz Question # 1. True or False: Forecasts from Wall Streets financial experts have consistently, dramatically underperformed the stock market for more than 50 years.
Investing Quiz Question # 2. Which of the following is not a good tax preparation tip?
A. Stuff your retirement account to the gills.
B. Give appreciated stock or other assets.
C. Cut your losers, and let your winners ride.
D. Use the money in your Flexible Savings Account sparingly.
Investing Quiz Question # 3. Which two rules are invaluable for bond selling?
A. "When the spread is high, it's time to buy."
B. "When the spread is low, it's time to go."
C. "When junk bonds are popular, it's a great time to buy them."
Investing Quiz Question # 4. True or False: The best way to earn on your investments is to choose wisely, and stack your portfolio with winners.
Investing Quiz Question # 5. Which of these investment strategies is NOT recommended?
A. Asset allocate.
B. Follow position sizing.
C. Pay attention to trailing stops.
D. Use Fibonacci numbers.
How'd you do? Check your answers below
1. True: When the financial experts all agree, you're likely better off doing the opposite than doing what they say. In the past 50 years, the experts have only beaten the market 23% of the time Said another way, the experts were wrong more than three times out of four! Read more about how to track the experts in Investment U e-Letter #403 - The Experts Couldn't Be Easier to Beat.
2. D: The money in your Flexible Savings Account is "use or lose" and if it's not spent by year's end, you've wasted money. Schedule doctor's appointments, buy new glasses - make the most of the account before the end of each year. For more information on tax tips check out #392 - Investment Tax Advice.
3. A and B: The time to buy junk bonds is when people are scared, when we are in recession, and when nobody wants them. That means: Don't follow the crowd! For information on when to buy bonds and when to steer clear, read #408 - High Yield Bond Funds.
4. False: Even great investors are often only right about 35% of the time They lose money on two out of three investments. Their total returns are enormous because the size of the winners far outpaces the size of their losers. The goal is not to get every one right. The goal is the overall return. For more on this, read Investment U e-Letter #384 - How You Really Make Money Investing.
5. D: We have a few simple but effective tools that have stood the test of time - Fibonacci numbers, Japanese candlesticks and tealeaves aren't included on that list. No fads, just common sense. Asset allocation, trailing stops and position sizing are a few of our recommended tools. For more, check out #391 - Investment Risk.
Today's Investment U Cribsheet
Your Investing Quiz Score: Here's our unofficial scoring system for today's quiz, based on the number of answers you got correct:
5: Investment Senior - You're the big man (or woman) on campus
4: Investment Junior - You're nearly ready for the real world
3: Investment Sophomore - You're a lot of fun to talk to at parties
2: Investment Freshman - Let the hazing begin!
0-1: Dear Applicant - We thank you for your interest, but we regret to inform you