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1.
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.
2.
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.
3.
What's perhaps the best way to bear-proof a portfolio?
Build a diversified portfolio that owns a little bit of everything. Timing the market by moving to cash rarely succeeds, while bear-market funds will lose money during a bull market.
4.
During a recessionary period, what usually holds up well?
Health-care stocks. Stocks of companies that produce must-have products, such as drugs or food, tend to do best during recessions. Those investments dependent upon a healthy economy, including junk bonds and cyclical stocks, tend to do poorly.
5.
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.
