smart money...

Discussion in 'Trading' started by dgmodel, Apr 27, 2003.

  1. dgmodel

    dgmodel Guest

    what is the definition of smart money??? simply because one invests with size does not mean it is smart money... wouldnt agree??? some of the savviest, and most astoot investors make foolish investments/decisions... with this being said... how do you discern which is smart money, which is "dumb" so to speak... and how could you implement this while reading the tape???
  2. Here goes a very broad generalization:

    Smart Money: Hedge funds, Quants, insiders.

    Dumb Money: Mutual funds, 'the public'.
  3. dgmodel

    dgmodel Guest

    so how do you know whos who???
  4. Well, if you do not know who the dumb money is...
  5. Yeah, that's the tough part. IMO, spotting the dumb money is easier than spotting the smart money. By law, all company insider activity is published- but only weeks after the fact.

    There was alot more dumb money around 2 1/2 years ago.
    When QCOM was up 34-fold in one year, and still had big up days- that's dumb money getting in.

    Heavy selling after the market's been getting killed for weeks- like last July & October- that's dumb money (forced selling, caused by mutual fund redemptions) getting out.

    Some guys also look at odd-lot activity & the Ameritade Index.
    ( )

    IMO, Daytrading sucks these days precisely because equity mutual fund inflows have slowed to a trickle, and there's not nearly enough dumb money moving in & out to make things interesting.
  6. dgmodel

    dgmodel Guest

    lol theres always nasdaq...
  7. The dumb money shortage is especially bad in Nasdaq.
  8. There are always the options markets...
  9. Yeah, as if.

    Who do you think is on the other end of your options trades? It sure as hell isn't Janus/ Invesco, and it probably isn't Joe Sixpack on his Ameritrade account either.
  10. dgmodel

    dgmodel Guest

    i hardly ever trade nasdaq... (only on swings and very rarely if that, for Y02 i only made three nasdaq positions)
    #10     Apr 27, 2003