Investment Strategies and Market Volatility

What is a common mistake investors make during market downturns?

• Selling investments to avoid losses

• Investing in bonds

• Holding onto their investments

• Buying more stocks

Why is it difficult to consistently time the market?

• Because stocks never recover

• Due to the lack of historical data

• Because market trends are predictable

• Due to the risk of missing out on potential rebounds

What is a key strategy to handle market volatility?

• Investing only in stocks

• Keeping a short-term perspective

• Creating a diversified portfolio

• Avoiding all investments

How does diversification help in managing investment risk?

• By avoiding bonds

• By spreading investments across different asset classes

• By concentrating investments in one asset class

• By investing only in high-risk stocks

What was the performance of a 50/50 stock and bond portfolio compared to an all-stock portfolio from 1971 to 1974?

• Both portfolios had the same performance

• The 50/50 portfolio had reduced volatility

• The all-stock portfolio had less volatility

• The 50/50 portfolio had higher volatility