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If The Smart Money Is Selling, Who's Buying?
Based on Bloomberg's Smart Money Flow indicator, there is a very significant amount of distribution going on... the question is just who is soaking up the smart money selling? Company buybacks, Johnny 5, or a greater-fool retail investor?
Perhaps this chart from Lance Roberts at STA Wealth provides some color for who?
However, the idea that individual investors are still "out of the market" should be taken with a bit of caution. The chart below is data compiled by the American Association of Individual Investors (AAII) which surveys it membership on portfolio allocation. The data is compiled and released monthly.
With cash hovering at the lowest levels since the "Tech Wreck," and equity exposure at the highest, investors are more than just "warming up" to equities. They are effectively "all in" with respect to the financial markets.
Chart: Bloomberg
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Um... the dumb money?
That would be US! (by proxy, of course)
It's the Algo's, swapping back and forth.
If they ever get together and collude, we're in real trouble.
Dark_Horse
His name is Mr. Yellen.
The free money is buying.
Even fonestar is not buying... and he's not very smart.
Yelling buying....will own 70% of the market by 2016....bichzzz ain't going down...Spy that is
fonestar,
That made me smile, thanks!
DavidC
Good question, but the answer should be obvious from the continuing discussions here.
Real volume is lower than a snake's navel in a wagon rut. There isn't much action except the 3:30 ramp.
And, of course, we all buy, through our mostly indexed pension funds, like it or not.
clearly Belgium has been buying everything.
Must be a good year for waffles.
Belgium has just been crushing it lately. Buyin' shit like it's cool! Now I know where all the missing German gold is.
If they were buying guns, ATF would arrest them for straw purchases. Oh wait.. if you're a government that's okay.
Mmmmm.....stroepwaffles!!
I'll explain it again. Euronet operates from Belgium. The EU though its proxy national banks buys treasuries, then posts them as collateral to borrow dollarz from the FED with which it buys more treasuries and so the cycle of infinite Ponzi goes on and on, the only limit is the rotation speed of the paperwork needed to enable each cycle to complete.
Yes, all that compulsory superannuation money has to go somewhere.
How do you guarantee quality when you're forced to spend? Shouldn't it be possible to walk away if there are no good deals on the table?
OK...who "talked" about Fight Club to Mr. Yellen?
America strong.....phsst
If CA$H is so low, that would be a smart thing to hold, real physical FIAT$.
"Buy and hold gold" is getting repetitive from The Bearing Guy, but I would have a solid core position in gold (5% minimum, that beats over 99% of other Americans). I have no problem with up to 20% - 25% of one's wealth in gold.
Disclosure: I am at some 11% - 12% depending on daily Au price movements.
80% here. liquid is the way to go.
Liquid stuff can vaporize, I prefer hard assets. :)
Don't forget silver, brass and lead, steel, coffee and any other import or non-local food or everyday item like TP for your bungholio. Nobody knows to what level things will sink. Best to be prepared for each level or stage and hedge with things like knowledge that will be useful in as many levels as possible.
Hey, Roller; Why not go 80% AU/AG? That's where I'm at. What should I fear?
This is actually a good read. no sarc
IOW....Belgium?
The allocations are fucked up. Why in 2008 did bond allocations continue to rise with the market? They clearly were moving inverse as they should have been prior to 2008.
The last six months show something peculiar as well.
Could it be.....
The motherfucking FED???
The proxy here is the Fed. They will buy every month! Or; So they say.
Your 401k! Where else is all that money supposed to go??
Belgium?
Think Wizard of Oz, the curtain is Belgium, who is Oz?
I missed the greatest opportuntiy long 50 CMG 560 at a buck sold them for a 10,000 profit worth 400,000 at the close I might be the next dude to jump
Must not be very smart considering they are missing the next leg of this up-move and the push past 2000 in the SPX this year.
I guess nobody told them about the green chutes and how this time is different; you'd think if they were smart they would realize we have reached a permanent high plateau, a new paradigm if you will.
"I guess nobody told them about the green chutes"
Green chutes, as in parachutes? In case you are forced to jump? Or green chutes, such as the color of your poop chute after having FRNs crammed in there for too long?
Me? I'm waiting for some real green shoots, such as the beans and melons I planted already.
Greater Fool Retail; always. it's the way markets work. Also, they're nervous, and when it doesn't make any sigficant new highs, they'll bail again. It's a dying momentum market.
I'll go with All of the Above.
The Muppets.
What did I win?!
does this mean that amzn common is a good deal?
Ooops, getting suckered again.
Legions of University and State employees being told at brown bags and TIAA-Cref/Fidelity broker propaganda sessions to "buy stocks for the long term".
Like shooting fish in a barrel for those people.
cref used to have a decent reputation these days it is shit. imo dumber than calpers but with higher fees.
Tell me about it. And very few sane options once you are in. Most of the State plans are shit, but we made that decision years ago, so it really doesn't matter.
I started exiting from TIAA-CREF shortly after the 2009 lows. I didn't see any point to putting up with zero interest rates on stuff that had been paying around 6% since the late 80s.
Janet 5
Screw Janet. Oh, I take that back. Not even with a paper bag!
Cramers , Fools rush in crowd. BUY,BUY,BUY, Damnit. Here we go...DOW 18000!
"They are effectively "all in" with respect to the financial markets."
...tick...tick...tick...
False premise
http://en.wikipedia.org/wiki/False_premise
If the dumb money is not buying the smart sells, then the smart money cannot be smart.
D A F E D
http://www.ebaumsworld.com/video/watch/38858/
The "smart money" flows seem to believe the taper story. Mid December, what happened then? Is the smart money really that smart?
The taper story was put out because QE is having less and less positive effect. By putting out the taper story they averted an immediate panic. QE is expanding if anything.
QE is detrimental. You can't fix a burst bubble by blowing another one.
QE is expanding by FED buying long duration bonds, not short term. This calms the entire bond market.
You are! Whether you like or know it or not!
Exactly, in more ways than we can track.
Retail investors. Always late the party, showing up right before it crashes. Or it could go on another 8 months before a crash. Who knows.
"Always late the party, showing up right before it crashes."
I wonder if it isn't planned that way. Once they're all-in again, that's when the programmed dump occurs. They keep teasing them in by the daily ramps, and when a "pullback" or "correction" happens, they are convinced to jump in and ride the tide as it goes ever higher.
I have written it many times- the market will keep rising until Mom and Pop put their 401Ks and IRAs back into stocks. Maybe this is starting to finally happen, but I think it has a way to go yet.
The ALGOS are broken. No one is buying this shit except the plungers working for the Communists.
When the FED stops printing the market will start tanking until the FED starts printing.
there's a sucker born every nano-second.
Do these terms mean anything anymore?
There's the smart-n-savvy, the dumb-b-clueless, the institutions on auto-pilot, the algos, the space-aliens..
Anybody else?
I am investing in this market like I'm investing in a deal to sell snowmobiles in Egypt.
DJIA is down 0.10% on a day where heavy duty IBM sheds well over 3% or nearly 6 billion Dollars in marketcap. Yeah, I understand their variables and the weighting of the stocks in the index. But what please tell are the pundits trying to explain which company offset the drop in IBM?
No wonder the "smart" money is leaving. The "smart" money has been selling to the Fed all these years and they sure as hell aren't going to stay long in a market where the Fed has declared a taper. Smart money is made on inside deals. Inside is running on fumes and losing HFT advantage.
Someone, maybe the Fed is painting the tape but the tape has no bearing on how much money is in the market or how well individual stocks are doing.
If stocks were healthy, the insiders could liquidate huge positions in a short amount of time to a well positioned buy side. That's not the case. Selling large positions is difficult.
Re: I'm investing in a deal to sell snowmobiles in Egypt
Do you have a newletter?
I think you mean snowballs to Eskimos. The Egyptians may like snowballs.
Gold is either at 0% or was simply excluded from this clueless survey. Or both.
"was simply excluded"
In their eyes it is covered adequately by the ETF's (GLD, SPDR-G, etc).
Buyers are the issuers themselves, a la stock buybacks.
Price talks, bullshit walks.
agreed, I like ZH, but if I listened to them every time they said the market was going to drop, I would be broke for sure...
The Fed is buying everything with free money, possession is the goal and 9/10ths of the law, so the central banisters will own everything and no one gets it or suspects a thing.
Wow..I think I uparrowed almost every comment so far.
I keep hearing the likes of Gary Kaultbaum repeating how higher stock (aka asset prices) "are good" but he never qualifies for whom. Tell me, are higher asset prices good for a young family? old folks sitting in cash at .025%? Middle class who can't afford to contribute to their 401.k because of ripping food, college and medical cost? Every fucking day that goes by they discover a new way to squeeze just a little more juice out of the average joe.
We are Venezuela.
If you happen to look at The Baltic Dry Index and The Velocity of Money then look at The Dow,it makes you wonder.
"look at The Baltic Dry Index and The Velocity of Money"
Since they are both down, does that imply that we are no longer shipping break-bulk loads of cash overseas?
Probably from the fees Ric Edelman charges his clients. Or, maybe it is like the Matrix and nobody is really buying, but computer programs have taken over. Who oversees the software used by the stock markets?
Is that the same guy as Rice Delman
Is the market psychology chart even relevant when HFT algos are running the show...? Last time I checked HFT takes emotions out of the equation. Further, how can one predict the emotional state of the latest bull market when the Fed and other central banks continue to re-spike the punch bowl ?
People funding their IRAs.
The Fed is buying (via TBTF banks they bankroll)
In poker, we call this "bay stealing" (where one player deals the cards to both a mark *and* another player he is working with to rig the deck).
Yeah kinda like that but... wait, you have been getting cards? All I've been getting are taxes and regulations.
Suckers!!!!!!!!! Your 401k, 403b and pension fund managers are stuffing your portfolios with absolute shit right now so that the preferred customers can unload said shit and hunker down. This is just a theory.
AAII total membership if I remember is 600,000. They get about 35,000 "opens" on their email blasts. I went down to their conference this year in FL and it was like a geritol convention. I counted not one, but three overweight people in wheelchairs with oxygen masks. There were a few young men and women, but for the most part the demographic skewed very old.
I have reservations about that group for larger reasons but I won't go there.
For the 35-45 crowd I'm in and those who still have their 6 figure jobs, they are still plowing money into their highly correlated 401(k)s [ and ROTHS ] with reckless abandon. No tapering, no idea how they are allocated they just know its going "up" all time. I try to get them its increasing in value simply because they are contributing, but that doesn't make sense to them.
They think they are participating in the market and that is what matters. Some of these 401ks don't even have a decent cash option. So its not like you can get out. My friends over at United Technologis get so set up with discretionary contributions in company stock that they don't realize they are contributing 7% to their 401k and 15% to UTX.
The market is going to bulldoze the sheeple and that is the way it works. They have to remain as the middle class and we as a society cannot afford to have them keep their money and let it compound at 7% from these levels.....that would be a disaster.
"Some of these 401ks don't even have a decent cash option."
How about almost all? There are none in our 401K, and unless you go through Fidelity (who manages our account) and set up an account (at extra cost) you have little more than Target Date Retirement Funds in the regular kettle to choose from. Luckily (or not, time will tell) they also offer a Stable Value Fund in the mix. I am all-in on that one. It is mostly GIC (some wrapped)/Synthetic GIC, with AA or better rated corporate bonds and of course, the usual haul of mid and long dated Treasuries/Agency Debt.
I know they are going to slam us in the end, but I try to be optimistic about the whole thing, and I want to retire in three years anyway. Since they match at 75%, I consider that my ROI, and the 4 to 5% return from the stable value fund is the gravy.
I feel for you! My 401k at least offered a bond fund and the hope that all this common inflation talk will force a massive backing up of short rates and a long bond bonanza just in time to catch the new bull?
The Fed is using billions of printed money to buy the market - in secret of course.
They are also printing and buying US gov bonds via Belgium - because nobody else will --- just like Japan is
No problem for money .The Bail'ins will pay.
Bail outs or Bailins- no difference- Only with Bailins - it's direct to the Banksters account. No need for a Neil to Kari Kash.
You may be the only other one who actually remembers Neil Kashkari.
Congratulations for not forgetting at least one of these crooks; ditto with Pete Orszag.
Q: In the chart entitled "net equity inflows vs SP500", what comes after euphoria??
A: jerking off in a department store change room
Who is Buying, Really? WTF?... The fed runs the show, Five Years and counting. Who is Rigging? The Fed, the TBTF, the Oligarchy.
The computers running / scalping "other peoples money" go along for the ride.
I was sitting in the (Very Busy) FT Lauderdale Airport for two hours yesterday afternoon near the "CNBC" News Store, ( WTF?,we know the only "News" that really matters comes from Joe and Becky )... Non-Stop Breaking News, "Nasdaq has its best day since yesterday."
The Machine's attempt at pumping "The Market" at the Airport ? Looked like a huge fail, not one person looked at the Flat screens positioned there. People waiting around killing time every fucking where and not on person gave a shit about "the Market", "Fast Money", or Cramer.
You hear the one about Japanese central bankers freezing out private buyers of credit for a day and a half? Who fuckin cares were the individual is parked or invested or whatever? How does this central bank normalize its bond market if the private invested sit on their hands? Demanding higher rates and another recession?
Ah, the smell of DESPERATION in the morning...ever notice the worse the news, the higher the market goes?