It's OK to Be a 'Dumb Money' Investor

It's OK to Be a 'Dumb Money' Investor

Pay attention to what the "smart money" is doing...

These professional traders are market experts. They don't get everything right... But their moves are shaped by experience and analysis. By monitoring these pros, you can figure out what's likely to happen next in the markets.

This isn't a novel idea – we've written about it many times before. But this lesson bears repeating because individual investors like you – the so-called "dumb money" – are the ones these major players are competing against.

The smart money is constantly hunting for ways to gain an edge, and everyday folks make an easy target.

For example, private-equity firms spent billions of dollars to buy thousands of single-family homes with the aim of renting them out as landlords.

Part of the reason Wall Street bigwigs chose this strategy was because they would rather compete with (literal) mom-and-pop homebuyers on real estate deals than the other sharks in their business.

Or take Ken Griffin, the billionaire head of Citadel.

Citadel is a hedge fund, but it doesn't make stock investments. Instead, most of its profits come from its market-maker function... Its algorithms make micro-predictions about prices so it can match, buy, and sell orders and skim off tiny profits from countless transactions.

To do this, Citadel pays brokerage firms such as Robinhood and Charles Schwab north of $2.5 billion per year to get orders from retail brokers. Griffin figures he can squeeze a better price out of the dumb money than if he took every order in the market. He pays so much for that trading flow, your brokerage firm could stop charging you commissions.

These unconventional approaches are just a couple of the many ways Wall Street firms try to make money by beating individual investors.

Now, we don't think about investing that way. We don't need to "beat" anybody. We can make great money in the markets even if someone else is making more than us – and all while focusing on investments that let us sleep well at night.

Still, we do try to find ways to help give average folks every possible advantage. We don't want to leave money on the table unnecessarily.

And we aren't the only ones helping even the score for the dumb money...

My friend Marc Chaikin started on Wall Street as an analyst more than 50 years ago. Most notably, he created proprietary stock indicators that the biggest Wall Street firms and traders still use all over the world to this day. One such indicator is the "Chaikin Money Flow," which has become an industry standard.

This revolutionary metric shows trading activity in the markets. It highlights which stocks and funds the smart money is pouring into... or abandoning.

Previously, Marc's indicators were only available to Wall Street pros who'd pay big bucks to access the data. But after seeing the fallout from the great financial crisis, Marc decided he wanted to help the "little guy" fight back.

So he made his proprietary system available to everyday investors. And using this technology, you can spot the biggest buying and selling sprees on Wall Street as they're occurring. This is particularly relevant right now.

And best of all, Marc just added a new filter measuring "earnings quality." With this tool, you can see which companies have reliable earnings and which are using accounting tricks to inflate their results.

Get all the details here.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
June 28, 2025

Reader question of the week...

Q: I use a sleep mask to make sure that no light disrupts my sleep at night. I find this to be a much cheaper solution than getting blackout blinds. Your thoughts? – A.C.

A: A sleep mask is indeed a good alternative to blackout curtains. It's also helpful if you have a partner who tends to read before bed.

When I'm traveling, I like to use a contoured sleep mask, since it gives your eyes room to move and makes the darkness much more comfortable. (It's a huge improvement on the type of mask airlines give you.) I use the brand Dream Essentials. Another good choice is Manta.

Keep sending your questions, comments, and suggestions our way. We read every e-mail... feedback@healthandwealthbulletin.com.