A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006.

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Entry from June 13, 2011
Dumb Money

"Dumb money” is money from the average investor (a small, unsophisticated investor). The term “dumb money” has been in common use since at least 1985.

The term “smart money”—money from well-funded, sophisticated investors—began in horseracing and gambling use since at least the 1890s.


1 April 1985, Atlanta (GA) Journal and Constitution, “Following the ‘dumb money’ isn’t smart” by Bill Hendrick, pg. C4:
It means the “dumb money” (as it’s called in market parlance) is betting that stock prices are headed lower.

New York (NY) Times
Market Place; Small Stocks Getting Short Shrift
By SUSAN ANTILLA
Published: April 29, 1992
(...)
Indeed, the investors who historically have turned in the most abysmal performance are the ones betting most heavily on stocks of small companies right now. Small investors who buy stock options have a notoriously bad record, said Donald Fishbach of the Cleveland-based Investment Research Institute, which studies patterns in options trading. Those folks are now quite bullish on little companies, heavily buying call options—a bet on higher prices. “This is the dumb money and the dumb money is almost never right,” Mr. Fishbach said

New York (NY) Times
The Capitalist; Fidelities
By MICHAEL LEWIS
Published: July 16, 1995
(...)
The smart money (the hedge fund types) largely missed out on the great surge of early ‘95. The dumb money (the people who read Smart Money) did not.

OCLC WorldCat record
DUMB MONEY - Do you trust your financial adviser? Take some advice from an insider: there’s more to fear than you think
Author: Jocelyn Chin
Publisher: Toronto : CB Media, 1977-
Edition/Format:  Article : English
Publication: Canadian business. 71, no. 10, (1998): 49
Database: ArticleFirst

OCLC WorldCat record
Dumb money : adventures of a day trader
Author: Joey Anuff; Gary Wolf
Publisher: New York : Random House, ©2000.
Edition/Format:  Book : English : 1st edView all editions and formats
Summary: “Using the rhythms of a day trader’s typical day as its frame, Dumb money is a dispatch from the front lines of the stock-market revolution, a brutally Darwinian battleground on which some become wildly rich and more become part of the body count."--Jacket.

OCLC WorldCat record
Dumb money : mutual fund flows and the cross-section of stock returns
Author: Andrea Frazzini; Owen A Lamont; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, ©2005.
Series: Working paper series (National Bureau of Economic Research), working paper no. 11526. 
Edition/Format:  Book : eBook : English

OCLC WorldCat record
The Trader- The “dumb money” looks smart in the latest rally. Will average investors join in?
Author: Michael Santoli
Publisher: Chicopee, Mass. : Dow Jones & Co., 1994-
Edition/Format:  Article : English
Publication: Barron’s. (October 02, 2006): M3
Database: ArticleFirst

New York (NY) Times
Wall St. Way: Smart People Seeking Dumb Money
By ERIC DASH
Published: December 31, 2007
On Wall Street, buyout professionals are seen as the smart money. But their new shareholders are starting to look like the dumb money.

The gilded realm of private equity — in which moguls use private money to buy stockholder-owned companies — has turned into dross for everyday investors this year. And hedge funds, those secretive investment pools for the rich and, increasingly, the not-so-rich, have been losers for the investing public as well.

OCLC WorldCat record
Dumb money : how our greatest financial minds bankrupted the nation
Author: Daniel Gross
Publisher: New York : Free Press, ©2009.
Edition/Format:  Book : English : Free Press pbk. edView all editions and formats
Summary: The author, who writes the “Money culture” column at Newsweek, examines the financial meltdown of 2008

Zero Hedge
Confirming “Dumb Money’s” Resilience To The Wall Street Siren Song
Submitted by Tyler Durden on 08/29/2010 01:54 -0400
When Zero Hedge first admonished our readers in June of 2009 to stay away from markets in light of a general deterioration in market structure, which included a regulator-authorized form of structural frontrunning in the form Flash trading (not to be confused with the imminently following Flash crash), an unprecedented mismatch between stock valuations and economic reality, and Wall Street continued attempts to reflate the ponzi merely for the sake of proving that it can be done, we never expected that retail would take to our warning with the ensuing solemnity. Yet with 16 consecutive outflows from domestic equity mutual funds, shut downs by legendary hedge fund managers such as Druckenmiller and Pellegrini (and many more Tiger derivative blows up to be disclosed soon, once the full extent of the carnage of the flattening of the steepener bandwagon trade is fully appreciated), virtually everyone is asking themselves how did Wall Street not only get it all so wrong, but how on earth is the primary business of the post-facelift Wall Street, which is no longer investment banking, but merely trading (with or without flow-facilitated prop frontrunning) going to sustain the recent record headcount levels (hint: it won’t, and many more banks will soon let go thousands of additional staffers as key revenue sources have now disappeared forever), and most importantly, why is this time different? Why did the “dumb money” for the first time ever, not bite on the Wall Street siren song lure of an economic “rebound”, but instead has hunkered down, proving that not only is Wall Street nothing more than a pure-play enabler of the ponzi regime’s status quo, but that all those who were warning that the economy is far more dire than Wall Street represents, were proven right.

Zero Hedge
Investor Sentiment: Haven’t Seen This in a While
Submitted by thetechnicaltake on 06/12/2011 10:00 -0400
For the first time since September 10, 2010, the “dumb money” indicator has turned bearish.  The Rydex market timers continue to remain extremely bullish, and company insiders are non-committal.  Consecutive weeks of investor bearishness as seen in the “dumb money” indicator is generally the best time to buy.

Posted by Barry Popik
New York CityBanking/Finance/Insurance • (0) Comments • Monday, June 13, 2011 • Permalink