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1.
How do bear-market funds aim to make money during bear markets?
By shorting assets. By shorting assets in certain classes, bear-market funds aim to do well when the market heads south.
2.
The investments that perform poorly during bear markets tend to be the same ones every time.
False. Each bear market attacks in different ways. Certain sectors tend to be hit harder in different ones.
3.
Bond funds often perform well, relatively, during bear markets in stocks.
True. Though not a given, historically they have held up well.
4.
During a period of rapid inflation, what usually holds up well?
Hard assets like precious metals and commodities, as well as inflation-linked bonds. Hard assets and inflation-linked bonds provide a bulwark against inflation, while many other asset classes gets ravaged.
5.
During a period of deflation, what usually holds up well?
Intermediate- and long-term bonds. Bonds tend to hold up relatively well in deflationary environments. Because their dividend income payouts are effectively worth more in this type of economy as the prices of goods decline, their purchasing power actually grows in deflationary environments.
