Strategy Intermediate: Market Timing

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1.
Which of the following is a risk of the buy and hold strategy?
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High volatility. This could lead to heavy losses.
2.
A stock that has its performance tied to economic trends is called a(n) _______.
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Cyclical stock. A cyclical stock moves up and down with trends in the overall economy.
3.
Market timing uses fundamental analysis to predict market changes.
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False. Market timing uses technical analysis to predict market changes.
4.
A company that uses market timing to switch its investments among mutual funds is called a timing service.
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True. This is the definition of a timing service.
5.
A whipsaw occurs when a successful timing strategy is executed and the investor makes gains on his or her trades.
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False. A whipsaw indicates investors are reversing themselves and may be losing money on the transactions.