How to Follow the Smart Money and Profit from the Stock Market

We have often heard of talk about Smart Money and Dumb Money.  We wish more investors were in the Smart Money category. However, what is Smart Money? 

According to Investopedia, the Smart Money is defined as cash invested or wagered by those considered to be experienced, well-informed, “in-the-know”, or all three.

The Smart Money sometime seems very abstract. However, the Smart Money can be one individual person or an institution, such as Warren Buffet, Jon Hilsenrath, Goldman Sachs, etc. These people or institutions have the capacity to move the market dramatically.

Just in case, you are not familiar with Jon Hilsenrath, he is a Wall Street Journal Federal Reserve reporter.  You can read the article, “Meet the Man Responsible For Today’s Huge 230 Point Dow Surge” from the following link to see how he is capable of moving the stock market.

http://www.businessinsider.com/jon-hilsenrath-2012-6

When Warren Buffet calls for buying stocks, usually there will be considerable profit.  Just recently, on 3/5/2013 he sent out emails to shareholders to buy stocks. The S&P closed at 1,539 that day.  On 5/6/2013, he said the market would go a lot higher. Sure enough, the S&P closed at 1,617 on 5/6/2013, and it registered a record intraday high at 1,709 on 8/2/2013.

On 12/5/2012, Goldman Sachs said that gold had reached its peak and the real rate would rise. 

The ETF GLD, which mirrors the gold bullion supply, made record highs in October 2012. On 12/5/2012, Goldman Sachs declared that gold had seen its highest level.  ETF GLD was closed at 163 that day. It went up a little bit before it drifted all the way down until 6/27/2013. The closing price was 115 and the bleeding finally stopped.  This was equivalent to a 29% drop.

Here is another example how to follow the Smart Money. 

Billionaire George Soros’s family office hedge fund, Soros Fund Management, filed its 13F quarterly report with the Securities and Exchange Commission on 8/14/2013.  According to Marketwatch reporter Barbara Kollmeyer, Solos bought a bunch of puts on the SPDR S&P 500 ETF, which is a bearish bet.

If you follow the Smart Money, you can profit from their trading patterns.

Read more here.