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1.
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.
2.
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.
3.
Bond funds often perform well, relatively, during bear markets in stocks.
True. Though not a given, historically they have held up well.
4.
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.
5.
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.
