Choose wisely. There is only one correct answer to each question.
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1.
Companies with wide economic moats tend to have _______.
Long-term staying power. Their competitive advantages help to ensure that they will survive for a long time.
2.
Is it a detriment to fat-pitch investors to hold cash when the market is rising?
No. It may be difficult to patiently sit on cash when the stock market is rising and you feel as if you're missing out on the fun. However, holding cash is akin to holding an option for when the market provides opportunities to buy at lower prices.
3.
Buying the stocks of wide-moat companies provides an automatic margin of safety because _______.
The companies' stock prices will likely appreciate in value anyway. Given the competitive advantages of wide-moat companies, their stock prices will likely rise, eventually catching up to your fair value estimate of them.
4.
An argument against trading wide-moat company stocks often is that they are already rising in value over time, so it's more advantageous to hold them for the long term.
True. A buy-and-hold strategy works well because the odds are that the underlying value will continue increasing over time.
5.
If you are going to succeed at holding a concentrated portfolio of stocks (say, fewer than 20), then your stocks should be held _______.
At least 3 years. It may take this long (or longer) for the market to recognize the value of a company.
