Investor Quiz Time!

It’s quiz time, and a fun way to learn a few investment facts. Or, maybe this is more a game of investment trivia.  In any case, I hope you enjoy it. Okay, here we go:

1.  The California Public Employee’s Retirement Systems (CalPERS), as of April 1st, manages $290.7 billion in their Total Fund, which pays retirement benefits to retired State employees. What do they consider to be the dominant determinant of risk and return to their investment portfolio?

2.  When Rex Sinquefield was Chairman of Dimensional Fund Advisors, Inc. in Santa Monica California, he was known for his description of two opposing and extreme views of the investment market.  One is the well-known efficient market hypothesis, which says that prices are always fair and quickly reflective of information and therefore investors will not be able to systematically pick winners or losers.  What is the other extreme?

3.  Over the years, some companies have noticed sub-par performance of their pension fund.  What is one action they are taking?

4.  What kind of mutual fund is receiving more and more new cash from both individual investors and pension plans?

5.  In 1997 the S&P 500 US stock index captured 70% of the US Stock Market as measured by market capitalization? What percentage does it capture today?

6.  Physics students learn the Heisenberg Uncertainty Principle, which suggests that the very act of measuring something distorts the qualities you seek to measure.  It has been suggested that there is a similar occurrence on Wall Street.  What is that occurrence?

7.  How many stocks are in the Dow Jones Industrial Average?

8.  How many stocks are in the Wilshire 5000 U.S. stock market index?


1.  CalPERs says “Strategic asset allocation is the dominant determinant of portfolio risk and return; a well-diversified portfolio shapes our long-term performance, and protects the Retirement Fund, and ensures any weaknesses in one area are offset by gains in another.” For a good read, go to their website and read their investment policy.

2.  At the other extreme is what Sinquefield calls the “market failure hypothesis.”  According to this view, prices react to information slowly enough to allow some investors, presumably professionals and now supercomputers, to systemically outperform markets and most other investors.

3.  They are firing their active (tactical stock picking and market timing) managers, reducing fees, and using more and more in-house management and index funds.

4.  Index funds.

5.  It now covers approximately 80% of the total US stock market.

6.  When a stock is admitted to the S&P 500 its price will usually rise.  The reason is that S&P 500 index funds must all buy these stocks. 

7.  The DJIA is the price-weighted average of 30 actively traded Blue Chip stocks.  It is the oldest and most widely quoted of all market indicators.

8.  The Wilshire 5000 Total Market Index, or more simply the Wilshire 5000, is a market-capitalization-weighted index of the market value of all actively traded U.S. stocks. As of March 31, 2016 the index contained only 3,607 components.  The index was first started in 1974 when there were about 5,000 U.S. publicly traded stocks. The number grew to a high of 7,562 in 1998 and has been shrinking since then.


Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment advisor and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investing, taxes, retirement, or estate planning.  Send your questions to: Ken Petersen, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to