SMART MONEY & DUMP MONEY

There is a great fight always on the market between smart and dump money. There is a negative correlation, if the smart money buys, the dump money sells and vice-versa. The smart money means corporate insiders, not brokers, and dump money means the small investor, an average rookie or looser from Wall Street.

What usually does the smart money? Buy low and sell high.

And what dump money does? Buy high and sell low.

Always in bad timing. Close their positions at the lowest point and open positions at highest point. It sounds crazy and you might think it is easy not to do that, but believe me it is not so easy. I have done that hundreds of times when I was rookie. They think they can predict the market and have a perfect timing, but it is absolutely not true.

They miss totally the big rally and just jump in the stage of „Greed” and holding in the whole period of falling and cover with a brutal loss the position at the point of „Despair” usually at the lowest points.

All the dump money movements could be nice contrarian indicator. We have to do the opposite what they do, watch and study when they get in and get out from the market. One fascinating thing now that the vast majority of business insiders are pretty bearish on their own shares. It means anything or not? We will see within few weeks.

The BFM Assets Team.