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Smart Money?

Observant1
edited March 11 in Other Investing
The ongoing war in Iran has rattled many investor's nerves.
The "smart money" (institutional investors) is saying the "dumb money" (individual investors)
will exhibit stupid investing behavior once again.
This blanket statement is utter nonsense!

"For every bit of evidence showing that individual investors do dumb things,
there’s at least one showing that institutions do, too.
'There is no ‘smart money’ or ‘dumb money,' I wrote years ago. 'There is only money.'"

"What’s more, 'during March 2000, institutional investors quickly pulled capital out of the market,
while individual investors continued to buy,' concluded a study in the prestigious Journal of Finance in 2011."

"Institutions 'significantly contributed to amplifying the [2020 Covid] stock market crash' with 'a significant
and largely indiscriminate withdrawal of capital,' concluded a study published last year in the journal
Management Science. Individual investors, however, 'took the opposite side of institutional trades
and appear to have fueled the stock market rally in the recovery period.'"

https://www.msn.com/en-us/money/savingandinvesting/smart-money-dumb-money-it-s-all-just-money/ar-AA1XUzBA

Comments

  • WABACWABAC
    I wonder whose money jumped in on the early days of our new war?

    Stay tuned.
  • CrashCrash
    Not me. I'm holding more losers than winners at the moment. So, "next time you tell me something, make it news!" LOL. Wouldn't you know I threw money at Japan just before this STOOPID war? 95% of its fuel comes through Hormuz. Brilliant move again, Crash!
  • DavidF
    @Crash Timing is everything, eh? Similarly, I recently purchased FPBFX-Fidelity Pacific Basin for exposure to Asia region. When war broke out it seemed clear (to me anyway) that my international funds wouuld be hit hardest. Sold entire stake in FIVLX-Intl Value to lock in gains and was able to ditch most of FPBFX without running afoul of Fidelity's frequent trading rules.

    I see no solution to this conflict without Strait of Hormuz safely opening to traffic again, if that's even possible.
  • CrashCrash
    @DavidF

    I got caught selling several shares too early and forfeited about $14.00 or so to TRP. Anyhow, I'm letting everything ride for now. Dividend due today from a single-stock holding, but I'll stick it into the MMkt rather than to reinvest it this time. Big vacation coming in August. Nice problem to have!
  • a2z

    i recall the notable few that sold early\all during covid.
    its safe to assume they paid huge taxes, but not safe to assume they timed the return. and dont believe that one guy that always claimed he did.

    but i have to say, for those in the 'stay rich' camp, many accomplished their primary goal by selling, even if they re-entered quite late. and also those that did nothing.
    its an uncertainty bounded problem, so...sell ~50% ?
  • WABACWABAC
    I sell the IRA and leave the taxable alone. I'm three years out from RMD's, so a little late to get rich, still time to save the buffer to the SSI debacle.

    I hope to leave the taxable to the spouse/kids, so there's a longer time frame in view. I might look at some tax-loss harvesting in positions I'm not terribly fond of anyway. I might even start buying. But there's no hurry there. My guess is that Iran can remain cranky for quite a while.
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