The Stock Market, From A Variety Of Viewpoints: Financial Advisors' Daily Digest

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Includes: STZ
by: SA Gil Weinreich

Summary

A look an investor and market maker behaviors.

Three viable, technical analysis-assisted exit strategies.

Robyn Conti signs off, handing the reigns of the FA Digest back to Gil.

SA Dividends, Income & Retirement Editor Robyn Conti here, subbing in for Gil, who's observing Passover this week. I'll do my best to fill his very talented and knowledgeable shoes and continue to keep you up to date daily on the latest FA analysis and news here on Seeking Alpha.

Today's FA Digest deals with different ways of looking at the stock market, but before we jump in, I wanted to thank you for accompanying me this week. It's been my pleasure to bring you a variety of topics of interest to financial advisors, and I hope you enjoyed this week's posts. Gil will be back in the captain's chair next week.

And now, on to today's stories...

In The Stock Market Is Not A Slot Machine, Nor A Vending Machine, Peter F. Way, CFA, presents a multi-faceted view of the markets from a behavioral finance and market makers' perspective. He writes:

Constant change keeps the market churning. Change in technology, change in competition, change in consumer attitudes, desires, change in opportunities, change in risk exposures, threats.

What doesn't change? Human nature, behavior.

Financial markets anticipate, as well as react. To deal with both conditions participants must make forecasts. Good forecasts need GOOD information.

GOOD information is not to be found in MIS-information - the deluge of largely irrelevant minutia flooding the print and electronic media that tells you what you already know (or think you know) - and "interesting" tidbits that distract, but are not relevant to what you need to know.

BAD information - DIS-information - is intentionally misleading falsehoods, usually cleverly disguised and presented at times and in ways to get you to do what will help others while hurting you. Value transferred, not created.

Peter then goes on to dissect how the market maker community assists big money managers in making timely trades, and provides an example of how their practices work by discussing how they view Constellation Brands (NYSE:STZ).

The bottom line: Advisors and investors need to pay attention to a variety of factors, from the potential for price changes to analyzing alternative options to when investments are made. Not rocket science, to be sure, but definitely an interesting and compelling point of view from someone with intimate knowledge of how market makers help engineer trades and move markets, and how they impact individual investors as a result.

Charles Schwab offers a different perspective, offering a look at exit strategies from a technical and charting angle. In Pulling The Trigger: 3 Exit Strategy Philosophies, they prescribe three different types of exits: 1. Find support and resistance zones, 2. Let your profits run, and 3. Take profits (but not necessarily all of them). It's a bit of a departure from the typical fundamental focus of most SA authors, but no less valuable and useful for advisors and investors who like to incorporate technical analysis and charting into their strategies.

Providing more of a 30,000-foot-view of the markets, William Koldus, CFA, CAIA, hypothesizes that, like all good things, the bull market we've enjoyed for so many years may, indeed, be coming to an end. He cites underwhelming Q1 earnings, emerging inflation, and soaring share prices returning to reality as reasons the bull market may be winding down. His thesis?

"Investors should turn their focus to late stage cyclical plays, as the bulk of the gains for the broader equity market have been achieved in the current bull market."


And from the world of retirement planning and money management, George Schneider discusses self-sabotaging behaviors that often plague investors as they find ways to procrastinate saving for retirement, and suggests a variety of common-sense solutions for turning the ship around, such as prolonging one's working years, saving early and often, and leveraging employer-sponsored retirement plans and other savings vehicles like traditional IRAs. Of course, the underlying message is that advisors have an opportunity to help clients right their retirement ships by making smart, informed decisions about their money and portfolios, making for smooth sailing into their happy golden years.

And finally, we continue to keep watchful eye on the economy here at Seeking Alpha. As such, here's some of the latest news and views:

Tim Duy warns the Fed may shed its dovish feathers and reveal a more hawkish approach going forward.

James Picerno writes that next week's April jobs report will impact whether markets remain bullish or take a bearish turn.

Eric Parnell takes a look at the good signs, and the not-so-good ones, for the U.S. economy going forward.

Comstock dissects past Fed moves, and speculates on how future Fed decisions may impact stocks.