Recession Indicators
A: This measure has preceded every U.S. recession since the 1950s when short-term Treasury yields rise above long-term Treasury yields.
Q: What is an inverted yield curve?
A: This is the amount a bond issuer promises to repay at maturity.
Q: What is par value (face value)?
A: direct indexing portfolio typically owns these instead of a single index fund.
Q: What are individual stocks?
A: Companies that reinvest most of their profits rather than paying dividends are often classified as these.
Q: What are growth stocks?
A: This term describes gains that have not yet been sold and therefore not yet taxed.
Q: What are unrealized gains?
A: This is the amount paid by the buyer and received by the seller when an option is traded.
Q: What is the premium?
A: The Sahm Rule uses increases in this statistic to identify recession conditions.
Q: What is the unemployment rate?
A: A bond trading above its face value is said to trade at this.
Q: What is a premium?
A: One of the biggest tax advantages of direct indexing is this practice.
Q: What is tax-loss harvesting?
A: This legendary investor is most commonly associated with value investing.
Q: Who is Warren Buffett?
A: Upon death, appreciated securities generally receive this adjustment under current law.
Q: What is a step-up in basis?
A: This portion of an option's value comes from the difference between stock price and strike price.
Q: What is intrinsic value?
A: Rising defaults in this category often signal consumer financial stress.
Q: What are credit cards?
A: Generally, longer-duration bonds have this level of interest rate sensitivity.
Q: What is higher sensitivity?
A: This IRS rule disallows a tax loss if a substantially identical security is repurchased within 30 days.
Q: What is the wash sale rule?
A: Value stocks frequently distribute more cash through these payments.
Q: What are dividends?
A: This version of the P/E ratio uses projected future earnings rather than historical earnings.
Q: What is Forward P/E?
A: The seller of a naked call faces this type of risk.
Q: What is theoretically unlimited risk?
A: This makes up roughly two-thirds of U.S. GDP and is closely watched for recession signals.
Q: What is consumer spending?
A: This graph plots bond yields across different maturities.
Q: What is the yield curve?
A: The goal of most direct indexing programs is to minimize this while harvesting losses.
Q: What is tracking error?
Q: Investors buy value stocks believing the market has made this type of pricing mistake.
A: What is undervaluation?
A: This yield is calculated as annual dividends divided by the stock price.
Q: What is Dividend Yield?
***Must Bet points before revealing question ****DOUBLE JEOPARDY
A: This strategy involves selling a put while holding enough cash to buy the shares if assigned.
Q: What is a cash-secured put?
A: A surge in this volatility index often reflects growing investor fear.
Q: What is the VIX?
A: This term describes the additional yield investors demand for owning corporate bonds instead of Treasuries.
Q: What is the credit spread?
A: Research often describes the tax benefit generated from harvesting as this type of alpha.
Q: What is tax alpha?
Q: Value stocks frequently outperform during periods of rising this.
A: What are interest rates?
Q: This metric compares enterprise value to earnings before interest, taxes, depreciation, and amortization.
A: What is EV/EBITDA?
A: This type of volatility reflects the market's expectation of future movement.
Q: What is implied volatility?