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Smart Money is the term used to describe institutional investors, such as hedge funds and mutual funds, or well-know individual investors, e.g., Warren Buffet.

It suggests that due to their experience and more sophisticated research capabilities they should be making smarter investment decisions than small individual investors, often referred to as retail investors.

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14y ago
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Deepika Shukla

Lvl 7
1y ago

"Smart money" in investing refers to the funds or investments made by experienced and knowledgeable investors. These are people or institutions who have a good track record of making successful investment decisions.

Imagine you're at a casino, and you have two choices for betting advice:

Your friend, who has a history of winning at the same game.

A stranger you just met.

If you follow your friend's advice, you're using "smart money" because your friend has a proven track record of making good bets. In investing, it's similar. Smart money comes from investors who have a history of making profitable choices. When they invest in a particular stock, company, or asset, others may see it as a sign that it's a promising opportunity because these experienced investors have done their research and believe it will grow in value.

So, in the world of investing, "smart money" represents the investments made by those with a history of making wise financial decisions. It's often seen as a signal of potential value and can influence other investors to follow suit.

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Q: What does Smart Money mean in investing?
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