smart money / dumb money ratio

Discussion in 'Trading' started by dozu888, Jan 29, 2008.

  1. dozu888


    what would you say is the ratio of smart money (e.g. hedgies with well defined edge) vs. dumb money (e.g. joe blow with a brokerage account who buys stocks on a hot tip)




    I am talking in absolute dollar amount terms...... trying to get a better understanding of the market structure.
  2. First you have to define how would you measure it.

    Large block orders, (10,000+ shares, or $200k+) can provide a great insight of large financial institutions.

    Be aware that sometimes the moves of smart money may be dumb choices for individuals.
    For instance mutual funds may not short, during market plunges.
  3. 1/99
  4. i think that ratio is about right.

    just because hedge funds have money doesn't mean they are smart money.
  5. Indeed, it's been shown that hedge funds as a group underperform the market, so it would be a mistake to put them in the "smart" category.
  6. the only smart money is the fast money! Whaddaya psychic or sumthin??!! buy and hold is for losers.