Smart, sophisticated investors don't usually put much money in mutual funds. Some buy on margin and borrow from their brokers. Investment advisors usually appeal to less sophisticated investors. Breadth of market shows which stocks are advancing and which are declining. Stocks above their 200-day moving average are popular with investors, but may be overpriced.
Analysts following what the smart, sophisticated investor is doing would examine
a-Mutual fund cash positions.
b-Debit balances in brokerage houses.
c-Investment advisory opinions
d-Breadth of market.
e-Stocks above their 200 day moving average
The smart, sophisticated investors mentioned in the statement are likely to make investment decisions based on their own analysis and strategies, rather than relying on mutual funds or investment advisors. They may also use margin borrowing from their brokers to increase their investment potential.
To track the activities of these investors, analysts would typically examine the options listed and determine which one aligns with their behavior.
a) Mutual fund cash positions: This option would not be relevant because smart investors are less likely to rely on mutual funds for their investment decisions.
b) Debit balances in brokerage houses: This option is more aligned with the behavior of smart investors who borrow on margin from their brokers. Examining the debit balances could provide insights into their borrowing activity.
c) Investment advisory opinions: This option is less likely to be relevant since smart investors tend to rely less on investment advisors.
d) Breadth of market: This option could be relevant as it shows the overall health of the market, including which stocks are advancing and declining. Smart investors may consider this information when making investment decisions.
e) Stocks above their 200-day moving average: This option could also be relevant. If smart investors are interested in stocks that are popular with other investors, they may look for stocks that are trading above their 200-day moving average. However, the statement also mentions that these stocks may be overpriced, which is something smart investors would want to consider.
Based on the information given, options b (debit balances in brokerage houses) and d (breadth of market) seem to be the most likely options that analysts following smart, sophisticated investors would examine.