Smart money, Pro's and institutions.....

the blades · Feb 27, 2007

Hello all,

Could someone clarify this for me (ref equity markets);

The terms "Smart money", "Pro's" and "institutions" are often used when describing the forces that really move the markets. Could someone explain the pecking order of the market movers, from "top to bottom"? From there, I'd be interested to find typical returns that are delivered by these categories.

I'm probably confused, but so often I read about smart money and institutions in the same breath, yet when you study the returns of the average unit / investment trust or hedge fund, they're hardly inspiring.

Thanks in advance for any clarification,
UTB

vetten · Mar 18, 2007

when you study the returns of the average unit / investment trust or hedge fund said:
hey blades, those institutions above cant be the smart money then, because you got the
figures right there...........probably nobody knows who the smart money is and its just a vague term used by the press

dcraig1 · Mar 18, 2007

Indeed. I would dearly love to know who is doing what to whom in stock index futures, but it is unfortunately not publicly available information. It sounds good as a bit of prose in chart commentaries, but as a useful paradigm I find it unconvincing.

the blades said:
Hello all,

Could someone clarify this for me (ref equity markets);

The terms "Smart money", "Pro's" and "institutions" are often used when describing the forces that really move the markets. Could someone explain the pecking order of the market movers, from "top to bottom"? From there, I'd be interested to find typical returns that are delivered by these categories.

I'm probably confused, but so often I read about smart money and institutions in the same breath, yet when you study the returns of the average unit / investment trust or hedge fund, they're hardly inspiring.

Thanks in advance for any clarification,
UTB

TWI · Mar 19, 2007

They are all used to describe the same thing. The smart money is not alwasy right but it is better connected than the average gambler.

A Dashing Blade · Mar 19, 2007

Imo, "Smart Money" refers to those people who are out before the "Stupid Money"

grantx · Mar 19, 2007

Smart money usually refers to the institutions or big playrers with the implication they are usually right.

However, the question arises as to whether there is sufficient 'amateur' liquidity to take the opposite sides of their trades. Last week in the Euro Stoxx future, four consecutive buys at (if I remeber correctly) sizes 2000, 4000, 7000, 5000 went through at market.

So who took the opposite side? Perhaps there were 18,000 small lots on the bid. I would guess it was other institutions. But were these opening or closing trades? If the former, both sides can't be right. If the latter, again both sides can't be right. But if one was opening, the other closing, theoretically they could both be right.

Maybe someone could suggest another take on this.

Grant.

the blades · Mar 19, 2007

grantx said:
Smart money usually refers to the institutions or big playrers with the implication they are usually right.

However, the question arises as to whether there is sufficient 'amateur' liquidity to take the opposite sides of their trades. Last week in the Euro Stoxx future, four consecutive buys at (if I remeber correctly) sizes 2000, 4000, 7000, 5000 went through at market.

So who took the opposite side? Perhaps there were 18,000 small lots on the bid. I would guess it was other institutions. But were these opening or closing trades? If the former, both sides can't be right. If the latter, again both sides can't be right. But if one was opening, the other closing, theoretically they could both be right.

Maybe someone could suggest another take on this.

Grant.

Thanks for the responses chaps.

Grant -

"Smart money usually refers to the institutions or big players with the implication they are usually right" ........how is this best illustrated in terms of results - are there a range of funds that can be seen that reflect this "smart" status?

It certainly can't be unit / investment trusts, and the average hedge fund return (that I see) aren't inspiring either(? )

Any thoughts?

Cheers,
UTB

roguetrader · Mar 19, 2007

I'd agree with all above, smart money is media speak for the Institutions, Investment banks etc. Why "smart" you all say, their results aren't that great, basically cause they are considered professional, it's what they do. Of course there is another take, they trading other peoples money and getting well paid to do it whether they make profit or not, that's pretty smart.

the blades · Mar 19, 2007

roguetrader said:
I'd agree with all above, smart money is media speak for the Institutions, Investment banks etc. Why "smart" you all say, their results aren't that great, basically cause they are considered professional, it's what they do. Of course there is another take, they trading other peoples money and getting well paid to do it whether they make profit or not, that's pretty smart.

aye, getting paid 1.5% no matter if you lose 20% of your clients money is pretty "smart", but not in the way it's so often suggested I suspect.

UTB

grantx · Mar 20, 2007

Blades,

"getting paid 1.5% no matter if you lose 20% of your clients money is pretty "smart"". Ain't that the truth?

Smart money is also often used in the context of the next big thing, eg " Smart money is moving into..."
In other words, it's a ramp, in before Dashing's "stupid money".

Nothing like a good dose of cynicism.

Grant.

barjon · Mar 20, 2007

seems to me there is smart money and not so smart money.

smart money is the big players moving their own accounts - whether they be individuals or institutions

not so smart money is the big players moving funds given to them by the public (dumb money) - funds etc. After all, if the public keep pouring money into them they've got to do something with it whether they like it or not.

Whether it's smart, not so smart or dumb it all comes down to money flow in the end.

good trading

jon

Smart money, Pro's and institutions.....

the blades

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vetten

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TWI

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A Dashing Blade

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grantx

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the blades

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the blades

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grantx

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