Through articles on the Money Talk page and discussions during the weekly Money Talk Podcast, 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.
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1.

In the Jan. 7 Money Talk Podcast, Chris Evers noted a drop in growth stock returns for the first week of the year. Which of the following was an explanation Chris gave for the sell-off?

1. Growth stocks tend to sell off at the beginning of each year as older retirees trim higher-priced stocks and funds to meet their required minimum distributions from IRAs.
2. Investors expect higher interest rates, which would discount the value of future earnings, especially for growth stocks, which tend to have most of their expected earnings a few years out.
3. Technology companies that dominate the growth category tend to lose value after trending up through the year-end holidays.
4. New international antitrust regulations that took effect Jan. 1 are expected to eat into the profitability of growth-oriented companies.

(See correct answer below.)

2.

In the Jan. 14 Money Talk Podcast, Bob Landaas said investors should consider that the economic cycle is probably transitioning from its middle to late stages, even though the current expansion began less than two years ago. What reasoning did he give for that?

1. Expectations of interest rate increases by the Federal Reserve are altering the typical length of the cycle.
2. Cycles tend to move faster from expansion to contraction when inflation is high.
3. The recovery from the pandemic-induced recession was so swift that it advanced the cycle stages.
4. High stock valuations have been hastening the stages of the cycle.

(See correct answer below.)

3.

Given the advanced stage of the business cycle, Kyle Tetting said in the Jan. 14 Money Talk Podcast, investors should expect “the easy money is over.” What consequence did he suggest that might have on investment strategy?

1. Get out of stocks sooner
2. Invest more abroad
3. Be more concerned about risk and rely on active management
4. Double down on fixed-income investments

(See correct answer below.)

4.

In the Jan. 28 Money Talk Podcast, Dave Sandstrom said banks are forecasting between  three and seven occurrences worth keeping an eye on in 2022. “That’s a pretty big disparity,” Dave said. What are the occurrences?

1. Sell-offs of 10% or more of the S&P 500 stock index
2. Record highs in the S&P 500
3. Yields above 3% in the 10-year Treasury
4. Short-term rate increases by the Federal Reserve

(See correct answer below.)

Answers

1.

b) Investors expect higher interest rates, which would discount the value of future earnings, especially for growth stocks, which tend to have most of their expected earnings a few years out.

Learn more
Broader views of market movements, a Money Talk Video with Dave Sandstrom and Kyle Tetting
How to benchmark investments, a Money Talk Video with Chris Evers
How automated trading riles stock volatility, a Money Talk Video with Paige Radke

2.

c) The recovery from the pandemic-induced recession was so swift that that it has advanced the cycle stages.

Learn more
Allocation to optimize reward vs. risk, a Money Talk Video with Dave Sandstrom
Investors and the business cycle, a Money Talk Video with Dave Sandstrom
Talking Money: Business Cycle, by Peter May

3.

c) Be more concerned about risk and rely on active management

Learn more
Staying active as conditions change, by Joel Dresang
When Should I …consider actively managed funds? 
The case for active funds amid volatility, a Money Talk Video with Kyle Tetting
What You Need to Know About the Passive vs. Active Management Debate, from the Financial Industry Regulatory Authority

4.

d) Short-term rate increases by the Federal Reserve

Learn more
Earnings, interest rates and valuations, a Money Talk Video with Brian Kilb
Earnings yield: Valuing stocks vs. bonds, a Money Talk Video with Kyle Tetting
Volatility: Stock market vs. your portfolio, a Money Talk Video with Kyle Tetting
Key economic indicators every investor should know, from the Financial Industry Regulatory Authority

Previous Money Talk Quizzes

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 February 4, 2022)

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