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If The Smart Money Is Selling, Who's Buying?

Tyler Durden's picture




 

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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Thu, 04/17/2014 - 17:49 | 4670988 Bryan
Bryan's picture

Um... the dumb money?

Thu, 04/17/2014 - 17:49 | 4670989 NotApplicable
NotApplicable's picture

That would be US! (by proxy, of course)

Thu, 04/17/2014 - 17:53 | 4671006 Dark_Horse
Dark_Horse's picture

 

It's the Algo's, swapping back and forth.

If they ever get together and collude, we're in real trouble.

Dark_Horse

Thu, 04/17/2014 - 18:01 | 4671030 Richard Chesler
Richard Chesler's picture

His name is Mr. Yellen.

Thu, 04/17/2014 - 18:09 | 4671044 Supernova Born
Supernova Born's picture

The free money is buying.

Thu, 04/17/2014 - 18:14 | 4671061 fonestar
fonestar's picture

Even fonestar is not buying... and he's not very smart.

Thu, 04/17/2014 - 18:54 | 4671177 max2205
max2205's picture

Yelling buying....will own 70% of the market by 2016....bichzzz ain't going down...Spy that is

Fri, 04/18/2014 - 04:43 | 4672372 DavidC
DavidC's picture

fonestar,
That made me smile, thanks!

DavidC

Thu, 04/17/2014 - 18:10 | 4671049 kaiserhoff
kaiserhoff's picture

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.

Thu, 04/17/2014 - 18:15 | 4671064 maskone909
maskone909's picture

clearly Belgium has been buying everything. 

Thu, 04/17/2014 - 18:18 | 4671067 kaiserhoff
kaiserhoff's picture

Must be a good year for waffles.

Thu, 04/17/2014 - 21:02 | 4671604 TammanyBrawl
TammanyBrawl's picture

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!!

Fri, 04/18/2014 - 17:59 | 4674076 spine001
spine001's picture

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.

Fri, 04/18/2014 - 06:57 | 4672436 PT
PT's picture

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?

Thu, 04/17/2014 - 18:53 | 4671172 A Nanny Moose
A Nanny Moose's picture

OK...who "talked" about Fight Club to Mr. Yellen?

Thu, 04/17/2014 - 18:56 | 4671180 max2205
max2205's picture

America strong.....phsst

Thu, 04/17/2014 - 18:07 | 4671040 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

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.

Thu, 04/17/2014 - 18:16 | 4671065 maskone909
maskone909's picture

80% here.  liquid is the way to go. 

Fri, 04/18/2014 - 02:49 | 4672298 flyingpigg
flyingpigg's picture

Liquid stuff can vaporize, I prefer hard assets.  :)

Fri, 04/18/2014 - 00:22 | 4672122 TheReplacement
TheReplacement's picture

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.

Fri, 04/18/2014 - 01:15 | 4672213 tekmike13
tekmike13's picture

Hey, Roller; Why not go 80% AU/AG? That's where I'm at. What should I fear?

Thu, 04/17/2014 - 18:25 | 4671082 HedgeAccordingly
HedgeAccordingly's picture

This is actually a good read. no sarc

Thu, 04/17/2014 - 18:51 | 4671166 A Nanny Moose
A Nanny Moose's picture

IOW....Belgium?

Thu, 04/17/2014 - 19:07 | 4671208 Stoploss
Stoploss's picture

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???

Fri, 04/18/2014 - 10:11 | 4672857 AmCockerSpaniel
AmCockerSpaniel's picture

The proxy here is the Fed. They will buy every month! Or; So they say.

Thu, 04/17/2014 - 17:53 | 4671003 Mr Pink
Mr Pink's picture

Your 401k! Where else is all that money supposed to go??

Thu, 04/17/2014 - 19:11 | 4671220 Leaping Lizard
Leaping Lizard's picture

Belgium?

Fri, 04/18/2014 - 12:14 | 4673200 Alien 851
Alien 851's picture

Think Wizard of Oz, the curtain is Belgium, who is Oz?

Thu, 04/17/2014 - 19:41 | 4671352 The Axe
The Axe's picture

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

Thu, 04/17/2014 - 22:27 | 4671821 TheRideNeverEnds
TheRideNeverEnds's picture

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.  

Fri, 04/18/2014 - 08:12 | 4672539 Iam_Silverman
Iam_Silverman's picture

"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.

Fri, 04/18/2014 - 00:47 | 4672164 SAT 800
SAT 800's picture

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.

Thu, 04/17/2014 - 17:50 | 4670992 db51
db51's picture

I'll go with All of the Above.

Thu, 04/17/2014 - 17:51 | 4670997 kchrisc
kchrisc's picture

The Muppets.

What did I win?!

Thu, 04/17/2014 - 17:52 | 4671001 buzzsaw99
buzzsaw99's picture

does this mean that amzn common is a good deal?

Thu, 04/17/2014 - 17:54 | 4671008 ebworthen
ebworthen's picture

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.

Thu, 04/17/2014 - 17:56 | 4671010 buzzsaw99
buzzsaw99's picture

cref used to have a decent reputation these days it is shit. imo dumber than calpers but with higher fees.

Thu, 04/17/2014 - 18:11 | 4671055 kaiserhoff
kaiserhoff's picture

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.

Thu, 04/17/2014 - 22:07 | 4671843 VegasBob
VegasBob's picture

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.

Thu, 04/17/2014 - 17:57 | 4671014 I Write Code
I Write Code's picture

Janet 5

Thu, 04/17/2014 - 22:08 | 4671846 VegasBob
VegasBob's picture

Screw Janet.  Oh, I take that back. Not even with a paper bag!

Thu, 04/17/2014 - 17:58 | 4671019 wmbz
wmbz's picture

Cramers , Fools rush in crowd. BUY,BUY,BUY, Damnit. Here we go...DOW 18000!

Thu, 04/17/2014 - 18:03 | 4671024 sixsigma cygnus...
sixsigma cygnusatratus's picture

"They are effectively "all in" with respect to the financial markets."

...tick...tick...tick...

Thu, 04/17/2014 - 18:02 | 4671031 Goldilocks
Thu, 04/17/2014 - 18:04 | 4671038 danster82
danster82's picture

If the dumb money is not buying the smart sells, then the smart money cannot be smart.

Thu, 04/17/2014 - 18:09 | 4671048 Unknown Poster
Unknown Poster's picture

The "smart money" flows seem to believe the taper story. Mid December, what happened then? Is the smart money really that smart?

Thu, 04/17/2014 - 18:41 | 4671137 Money_for_Nothing
Money_for_Nothing's picture

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.

Thu, 04/17/2014 - 18:51 | 4671167 Unknown Poster
Unknown Poster's picture

QE is detrimental. You can't fix a burst bubble by blowing another one.

Fri, 04/18/2014 - 22:45 | 4674802 MrSteve
MrSteve's picture

QE is expanding by FED buying long duration bonds, not short term. This calms the entire bond market.

Thu, 04/17/2014 - 18:10 | 4671052 icanhasbailout
icanhasbailout's picture

You are! Whether you like or know it or not!

Thu, 04/17/2014 - 18:20 | 4671074 kaiserhoff
kaiserhoff's picture

Exactly, in more ways than we can track.

Thu, 04/17/2014 - 18:13 | 4671060 Spungo
Spungo's picture

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.

Fri, 04/18/2014 - 08:16 | 4672548 Iam_Silverman
Iam_Silverman's picture

"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.

Thu, 04/17/2014 - 18:14 | 4671062 Yancey Ward
Yancey Ward's picture

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.

Thu, 04/17/2014 - 18:18 | 4671068 Chuck Knoblauch
Chuck Knoblauch's picture

The ALGOS are broken. No one is buying this shit except the plungers working for the Communists.

Thu, 04/17/2014 - 18:19 | 4671071 bubblemania
bubblemania's picture

When the FED stops printing the market will start tanking until the FED starts printing.

Thu, 04/17/2014 - 18:23 | 4671078 Rehab Willie
Rehab Willie's picture

there's a sucker born every nano-second.

Thu, 04/17/2014 - 18:26 | 4671088 NOTaREALmerican
NOTaREALmerican's picture

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?

Thu, 04/17/2014 - 18:28 | 4671090 walküre
walküre's picture

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.

Thu, 04/17/2014 - 18:30 | 4671096 NOTaREALmerican
NOTaREALmerican's picture

Re:   I'm investing in a deal to sell snowmobiles in Egypt

Do you have a newletter?

Thu, 04/17/2014 - 18:46 | 4671150 Dolus
Dolus's picture

I think you mean snowballs to Eskimos. The Egyptians may like snowballs. 

Thu, 04/17/2014 - 18:30 | 4671097 anarchitect
anarchitect's picture

Gold is either at 0% or was simply excluded from this clueless survey. Or both.

Fri, 04/18/2014 - 08:25 | 4672562 Iam_Silverman
Iam_Silverman's picture

"was simply excluded"

In their eyes it is covered adequately by the ETF's (GLD, SPDR-G, etc).

Thu, 04/17/2014 - 18:30 | 4671102 pitz
pitz's picture

Buyers are the issuers themselves, a la stock buybacks. 

Thu, 04/17/2014 - 18:33 | 4671114 ThisIsBob
ThisIsBob's picture

Price talks, bullshit walks.

Thu, 04/17/2014 - 19:32 | 4671313 The Trade Group
The Trade Group's picture

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...

Thu, 04/17/2014 - 18:40 | 4671133 SheepDog-One
SheepDog-One's picture

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.

Thu, 04/17/2014 - 18:41 | 4671136 StupidEarthlings
StupidEarthlings's picture

Wow..I think I uparrowed almost every comment so far. 

Thu, 04/17/2014 - 18:53 | 4671173 booboo
booboo's picture

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.

Thu, 04/17/2014 - 19:04 | 4671198 nightshiftsucks
nightshiftsucks's picture

We are Venezuela.

Thu, 04/17/2014 - 19:39 | 4671345 Herdee
Herdee's picture

If you happen to look at The Baltic Dry Index and The Velocity of Money then look at The Dow,it makes you wonder.

Fri, 04/18/2014 - 08:27 | 4672563 Iam_Silverman
Iam_Silverman's picture

"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?

Thu, 04/17/2014 - 19:50 | 4671381 fwaynemartin
fwaynemartin's picture

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?

Thu, 04/17/2014 - 21:27 | 4671701 Darksky
Darksky's picture

Is that the same guy as Rice Delman

Thu, 04/17/2014 - 20:03 | 4671428 LaHeemTheLadiesDream
LaHeemTheLadiesDream's picture

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 ?

Thu, 04/17/2014 - 20:15 | 4671456 Umh
Umh's picture

People funding their IRAs.

Thu, 04/17/2014 - 20:53 | 4671576 Shizzmoney
Shizzmoney's picture

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).

Fri, 04/18/2014 - 00:30 | 4672134 TheReplacement
TheReplacement's picture

Yeah kinda like that but... wait, you have been getting cards?  All I've been getting are taxes and regulations.

Thu, 04/17/2014 - 21:04 | 4671609 FredFlintstone
FredFlintstone's picture

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.

Thu, 04/17/2014 - 21:25 | 4671689 Dr_Lucid
Dr_Lucid's picture

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.

Fri, 04/18/2014 - 08:35 | 4672588 Iam_Silverman
Iam_Silverman's picture

"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. 

Fri, 04/18/2014 - 10:46 | 4672956 elwind45
elwind45's picture

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?

Thu, 04/17/2014 - 21:42 | 4671754 Magooo
Magooo's picture

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

Fri, 04/18/2014 - 04:26 | 4672364 nathan1234
nathan1234's picture

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.

Fri, 04/18/2014 - 08:53 | 4672626 Comte d'herblay
Comte d'herblay's picture

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.

Fri, 04/18/2014 - 05:23 | 4672386 Rising Sun
Rising Sun's picture

Q: In the chart entitled "net equity inflows vs SP500", what comes after euphoria??

 

A:  jerking off in a department store change room

Fri, 04/18/2014 - 09:00 | 4672637 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture
If The Smart Money Is Selling, Who's Buying?  Answer: The Stupid Money.
Fri, 04/18/2014 - 10:13 | 4672866 El Hosel
El Hosel's picture

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. 

Fri, 04/18/2014 - 10:36 | 4672931 elwind45
elwind45's picture

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?

Fri, 04/18/2014 - 10:58 | 4673001 BullyBearish
BullyBearish's picture

Ah, the smell of DESPERATION in the morning...ever notice the worse the news, the higher the market goes?  

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