The “Smart Money” versus the “Dumb Money”

Top-25 Alternative Surfing Maneuvers

3. Observe the smart money. Watch what the institutional investors are doing. Are they buying or selling? Institutions are pension funds, mutual funds, insurance companies, banks, hedge funds, and other investors.

They tend to move in packs like wolves and can move mountains. They have billions of dollars to deploy. For example, the top-15 hedge funds all bought billions of dollars worth of gold during 2008 and 2009. Many hedge funds own the same stocks. Large funds need to report what they own, and the information is readily available. However, one can lose a lot of money this way if the hedge funds or other institutions dump the securities before you do. Remember, hedge funds compete with each other.

– Wave Theory, Chapter 3, p. 58

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