The seven big differences between the "smart money" and the "dumb money"


From Jeff Clark, editor of Casey's BIG GOLD:

You've probably heard the term "smart money" used by various pundits, a reference to those investors and institutions that are consistently better at making money than the uninformed masses... Which begs the question: are you one of them?

To answer that query, let's first describe smart money (not to be confused with the magazine by that name) so we have an idea of what makes this group of investors successful…

Smart money buys when others are fearful. A good example of this is last year's Gulf oil disaster. Wild speculation of British Petroleum's ultimate demise caused panicked bouts of selling. The stock lost roughly half its value in less than two months. To use a classic idiom, there was blood in the streets – and that, of course, was the time to buy. The investor who did so is currently up 50%, and that's not even measuring from the stock's absolute bottom.

Smart money sells when...

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