Page 37 - Kiplinger's Personal Finance - November 2018

TAKEAWAY

Test Your Bear Market I.Q.

Sooner or later, this bull market will run out of steam. Down markets are a fact of life. But because the
long-term trend of stocks is upward, investors with time and patience on their side can usually wait out a bear
market—or use it to their advantage. Test your knowledge of the darker side of stocks with our quiz.

1. Why do they call it a bear market, anyway?
A. The term originates with early bearskin traders. 5. You’ll know a bear market is coming
B. Bears sneak up on their prey and attack suddenly, in the once an economic recession starts:
same way that bear markets feast on investors. A. True.
C. Bears are notorious for ransacking campsites and B. False.
stealing provisions, in the same way bear markets
can destroy your financial well-being. 6. The worst bear market on record was:
A. In 2007–09, when the financial crisis
2. Stocks are officially in a bear market when: ushered in the Great Recession.
A. At least two major business B. In 1973–74, when the Arab oil embargo
publications proclaim a bear market. sent oil prices soaring and Richard Nixon
B. A broad market index, such as resigned the presidency.
Standard & Poor’s 500-stock index, C. The one that began just ahead of Black
falls 20% or more from its peak. Monday, which precipitated the Crash of 1929.
C. Stock prices end lower in the majority
of trading days within a 90-day period. 7. How long do bear markets last, on average?

A. 11 months.
3. Bear markets tend to occur: B. 21 months.
A. Once per decade. C. 30 months.
B. Every seven years.
C. Every three to four years. 8. Which of the following is NOT a good
investment for getting through a bear market?
4. Which of the following is LEAST A. U.S. Treasury bonds.
likely to cause a bear market? B. High-growth stocks with a broad following.
A. Military conflict or geopolitical crisis. C. Classically defensive plays, including utilities,
B. Higher interest rates. consumer staples companies and health care companies.
C. Rising inflation.

ANSWERS market, but they tend to lose less than average. bonds. Defensive stocks will lose ground in a bear quality” often leads to gains in U.S. Treasury 8. B. When stocks are in free fall, a “flight to according to S&P Dow Jones Indices. 7. B. The average since 1929 is 21 months, recessions. eight of 11 bear markets have been followed by 5. B. Bear markets usually come first. Since 1948, Iraq’s invas

72 KIPLINGER’S PERSONAL FINANCE 11/2018 500. The others aren’t even close. June 1932 resulted in an 86.2% loss for the S&P 6. C. The bear market from September 1929 to 4. A. Military shocks to the market have mostly Research. according to market research firm InvesTech ILLUSTRATION BY JOEY GUIDONE price than what they’d sold it for, “bears” became hoped to buy the fur from trappers at a lower not yet received—or paid f

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