There is No Such Thing as Dumb Money
For many years stock market investors have been thrown into two broad catch-all categories: smart money and dumb money. The Wall Street Journal is arguing that the idea of dumb money is absurd, even though retail investors have been shown to get overly greedy and fearful and trade at the most inopportune moments. The reason why is that reports of investors grossly underperforming the assets they hold are no longer relevant, as few investors hold mutual funds and other assets without the help of an advisor. For instance, 80% of all mutual funds held by investors outside of employer-sponsored retirement plans are held through advisors. What this means is that it is mostly financial service professional who are making the poor trading decisions.
FINSUM : This is an interesting bit of info as retail investors generally get slammed in the press. The reality is that the market is always hard to time, and often it seems that clients push advisors to make certain moves.
- smart money
- dumb money
- mutual funds
- financial advice
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