TRUE or false?

• The main article in The Economist in March 1999 was famously titled "Cheap Oil: The next shock?"

True. The article surmised that oil prices could be headed to $5 a barrel and prices might hover in a "normal" range of $5 to $10. If those figures still sound improbable, the thinking behind them may be worth revisiting.

• Something more complex than supply and demand determines stock prices.

False. Stocks are subject to the same law of supply and demand as any other product. Despite countless explanations as to why stock prices fluctuate as they do — anticipated earnings, balance sheet strength, innovation, the economy and/or the credit markets — in reality these have a minimal effect on prices other than the desirability of owning (or selling) a stock, in other words supply and demand.

• Besides bulls and bears there are lame ducks in the market.

True. Lame ducks is the name given to option traders who are unable to fulfil their contracts.

• On November 1 1997, Ron invested R10,000 in the all share. Ten years later, on November 1 2007, Molly invested R50,000. At the end of last week, Ron’s investment was worth more than Molly’s.

True. R10,000 invested at the beginning of November 1997, when the all share was at 5,720, would now be worth R87,640, whereas R50,000 invested in November 2007, when the all share was at 30,310, would now be worth R82,630. Molly would have had to invest an additional R3,000 in 2007 for her investment to be worth the same as Ron’s today, the all share having grown more than fivefold (430%) in value between November 1997 and 2007.

• The higher the risk of an investment, the higher the likely return.

False. A common misconception. The risk/return trade-off merely provides for the possibility of higher returns. Just as risk means higher potential returns, it means higher potential losses.

• In 1923 John Maynard Keynes famously called gold a "barbarous relic".

False. It was not gold but the gold standard he was referring to.

• Monetary policy was first introduced by the Yuan dynasty in 7th century China.

False. Whereas paper money called "jiaozi" originated from promissory notes issued in 7th century China, if we take monetary policy to mean the relationship between interest rates and the supply of money, the Code of Hammurabi, created 1760 BC in ancient Babylon, was the first example. It formalised the role of money in civil society by setting amounts of interest on debt, fines for wrongdoing, and compensation for various infractions of the law.

• Promises of an equity return that is far greater than the overall stock market return should always be ignored.

False. While it’s true that the promise of exceptional returns should serve as a red flag, such a dogmatic approach would have meant missing out on Franklin Resource’s 64,224% stock price gain over the last 25 years, Cisco Systems’ 33,632% gain, Microsoft’s 29,266% gain, and Oracle’s 28,535% gain.

It would also have meant missing out on the gain in Apple’s share price from $12 in 2009 to more than $109 at the end of last week.

• The best performing stock of all times is the Dutch East India Company, which listed on the Amsterdam stock exchange in 1602.

True. This multinational megacorporation was granted a monopoly by the Dutch government to conduct trade with Asia. The company operated for almost two centuries, paying out an annual dividend of 18% most of the time.

• Money invested in the stock market always provides a higher return than money sitting in a savings account.

False. The return on money sitting in a savings account between 1995 and 2000 when the prime overdraft rate climbed to 25.5% (August 1998) was significantly higher (more than twice) that achieved by the all share over the period. Likewise, the return on money sitting in a savings account between January 2006 and February 2009 would have outperformed money sitting in the market.

• "Win ’em, spin ’em, churn ’em and burn ’em" was the motto of Bedlam Assets Management, a London-based fund manager that closed its doors in 2013.

False. The phrase has traditionally been used to describe brokerage firms who aim to win a client over, tell them a good story about a stock (that may or not be true), and get them to do as many trades as possible (known as churning) until their money runs out.

• The US generates more than 20% of the world’s gross domestic product (GDP) with about 4% of the world’s population.

True. Or at least it was in 2011. Then the International Monetary Fund said the US economy, at an estimated $15.1-trillion in GDP, was larger than the next two largest countries’ economies combined (China and Japan). However, if you consider the European Union as one economy, it jumps to number one with $17.6-trillion.

• The S&P 500 was the best performing of the major global markets (top 20 by size) in 2011.

True. The S&P 500 lost 1.7% of its value in 2011. The next best performance came from the FTSE with a loss of 7.3%. India’s benchmark BSE index was the biggest loser, shedding almost 38% of its value.

• The S&P 500 was again the best performing of the major global markets (top 20 by size) in 2013.

False. Despite ending the year at an all-time high with a jump of 30%, Japan’s Nikkei ended the year more than 48% up, while Argentina’s Merval index rose a whopping 83.7% in 2013.

• The global bond market is nearly twice the size of the global equity market.

False. While true in 2011 when the global market for bonds was valued at $94-trillion and global equities at $54-trillion, Bloomberg now estimates the global bond market to be worth about $100-trillion, while the World Federation of Exchanges estimates the total value of the top 60 stock markets as at July had risen to $62.4-trillion.

• On August 14 this year Berkshire Hathaway’s share price hit $200,000, making it the highest price ever paid for a share.

False. The highest price paid was for Yahoo! Japan. According to the company the stock traded at ¥167.9m on February 22 2000. At an exchange rate, at the time, of about $1/¥111 that translates into a share price of $1,512,500.

• William Shakespeare made much of his money in stocks.

True. Unlike most artists of his time, Shakespeare died a wealthy man having formed a joint-stock company with his actors, meaning he took a share in the company’s profits, on top of earning a fee for each play that he wrote.