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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icanhasbailout's picture

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

kaiserhoff's picture

Exactly, in more ways than we can track.

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.

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.

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.

Chuck Knoblauch's picture

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

bubblemania's picture

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

Rehab Willie's picture

there's a sucker born every nano-second.

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?

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.

NOTaREALmerican's picture

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

Do you have a newletter?

Dolus's picture

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

anarchitect's picture

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

Iam_Silverman's picture

"was simply excluded"

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

pitz's picture

Buyers are the issuers themselves, a la stock buybacks. 

ThisIsBob's picture

Price talks, bullshit walks.

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...

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.

StupidEarthlings's picture

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

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.

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.

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?

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?

Darksky's picture

Is that the same guy as Rice Delman

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 ?

Umh's picture

People funding their IRAs.

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).

TheReplacement's picture

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

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.

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.

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. 

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?

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

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.

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.

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

Blue Horshoe Loves Annacott Steel's picture
If The Smart Money Is Selling, Who's Buying?  Answer: The Stupid Money.
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. 

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?

BullyBearish's picture

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