Smart Money

Sinking Under Two Years Of "Non-Stop Pain Trades"

"YTD investor performance has been plagued by “non-stop pain trades” as liquidity expectations weaken and investment horizons shorten. For example, July/August saw the S&P 500 media sector lose $100bn of market cap in 15 trading days, as well as significant losses in Asian and Emerging Market currencies following the Chinese yuan devaluation."

China's Richest Traders Are Rushing To Dump Their Stocks To The Retail Masses, Just Like In The US

As it turns out it is not just in the US that the "smart money" is bailing out as fast as it can: according to Bloomberg, the wealthiest investors in China’s stock market are also scrambling for the exits. To wit: "The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June."

Even The Dumb Money Is Dumping Stocks Now

Late in June, BofAML noted that during the previous week "sales [of US stocks] were the largest since January 2008, led by institutional clients [whose] net sales were the largest in data history." Whether that particular bout of smart money dumping was simply an effort to get out ahead of what threatened to be a rather ugly conclusion to six months of bailout negotiations between Greece and creditors we can't say, but what we do know is that not only is the smart money (still) selling, but now even the dumb money has joined the party.

Is The "Smart Money" Ready To Bet On Gold?

For the last three weeks, gold has experienced something that has never happened before - hedge funds aggregate net position has been short for the first time in history. However, as Dana Lyons notes, this week saw another 'historic' shift in gold positioning as commercial hedgers shifted to the least hedged since 2001... so the 'fast' money is chasing momentum and the 'smart' money is lifting hedges into them.

The "Smartest Money" Used Last Week's Surge To Dump Even More Stock

Moments ago we got the latest BofA client flow update in which we were expecting to find that the "smart money", flush with cash, and taking advantage of the Greek "deal" would jump in on last week's biggest weekly market surge since October 2014 when Bullard hinted at QE4 and unleashed a buying surge. To our surprise we find that not only did "smart" money continue selling, but they were joined by the "smartest" money of all, hedge funds.  And who did they sell to? Why retail investors of course... and corporate buybacks but that should go without saying.

BofA Stumped: Fund Managers Have Highest Cash Levels Since Lehman Yet Nobody Is Selling

The latest BofA Fund Managers Survey has left the report authors stumped: on one hand fund managers have the highest cash levels since Lehman at 5.5% (most since December 2008 and prior to that November 2001), which combined with a capitulation in risk appetite due to ongoing stress in Greece and China would suggest a screaming buy signal... but there is one problem: the same fund managers refuse to actually capitulate and sell, and as a result not only are bank longs at record highs, but equities remains solidly overowned but the group, offset by "protection" levels which are the highest since February 2008. In short, the current positioning is a "complete contrast to 2008."