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) 30/70? 50/50? 70/30? I am talking in absolute dollar amount terms...... trying to get a better understanding of the market structure.
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. http://www.tradetrek.com/Education/webclassroom/blocktrade.asp 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.
i think that ratio is about right. just because hedge funds have money doesn't mean they are smart money.
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.