smart money dumb money

Discussion in 'Trading' started by ashatet, Mar 23, 2008.

  1. ashatet


    OK guys, how do we define smart money anymore. What is it like 80% of the total investment money is controlled by the institutions, hedge funds, mutual funds, pension funds etc. That leaves just 20% of the retail investors, the perception seems to be that everyone but retail investors are smart money and that they take the money from the retail investors.

    How can that be, retail investors can not be sold massively to by the apparent smart money given the limited resources of the retail investors. I may also add that not all retail investors are stupid.

    I would be more willing to settle for the smart money to be holding something like 10% of the total holdings and they make a sucker out of the rest 90% of the dumb money.

    Now what does this smart money consists of:

    I think that MM and Specialists are for most part smart money, but who else?
  2. cold


    no you got it wrong

    Smart money is the money that sets the first trend in something. Smart money can be mix of organizational and retail. Smart money is not always correct, it is simply called smart money when it is correct.

    for example, lets say we reached bottom of S&P 500, (a joke I know) and the new trend up develops from the bottom

    well that first trend that later sustained itself and made a heck of a lot of money

    that is the so called smart money

    now of course you will always have insider traders, but again if they set the trend first, they are the smart money.

    Smart money is not bunch of guys that are 100% correct and always first ones in on something

    that is an illusion

    ok now I am leaving ET for real
  3. Smart Money can be anyone, as long as the trades are continuously profitable. Dumb Money is on the other end of the Smart Money's trade.
  4. Technically we see what the "Smart Money" do on the "decreased volume" day and what the "Dumb Money" do on the "increased volume" day. So "Smart Money" is always the minority of the Market.
  5. nkhoi

    nkhoi Moderator

    Bear Sterns was smart money.:D
  6. Diego11


    If you ask me all ET is smart money. Smart people stocks is smart money! Risky but highly liquid. Therefore smart money!
  7. speres


    smart money are the ones who know how the markets work. Emotions, mechanics etc etc.
  8. nkhoi

    nkhoi Moderator

    they are smart money too.:)