WLD, sometimes I find myself put in a position where I have to try to explain a thought or theory that wasn't mine to begin with, and that's what we're dealing with here in this discussion we had yesterday on big guys/smart money, which should be followed vs. small guys/dumb money, which should be faded stuff from yesterday.
The theories that surround that discussion aren't ones that I invented or espouse, it's more of a piece of sentiment theory or misnamed Wall Street "wisdom." Ski knows what I was speaking of, and I'd agree with his answer to you yesterday about, comparatively speaking, the investors and speculators being thought of the "small guys" are "as a GROUP are NOT smart." Although I know that to refer to institutions as a group as "smart" might be a misnomer, but I didn't create the terminology used in this theory, and I thought that I was merely relating a commonly held theory (whether one believes in it or not) but your reply made me think that maybe you had never heard of this idea.
IMO that doesn't reflect trading realities. There isn't enough "small money" out there to satisfy the Big Money appetite. The propellor heads at Goldman Sachs aren't looking for ways to fleece you and me - they're looking for ways to pull one over Merrill and RenTech and etc etc etc. I agree completely, but you might be taking what I was saying too literally, or thinking that I was espousing fact rather than sentiment theory. I've known for years that 80-90% of all trading is done buy the big guys, and the latest figure I've read puts it closer to 90% (I think it was in IBD recently).
The point of my whole discussion with ski, which probably got off to a bad start because of inartful wording on my part, comes down to this: who DO you fade, and when do you do it? |
