[The recent New York Times best-selling book entitled The Man Who Solved the Market—How Jim Simons Launched the Quant Revolution reveals the story behind Renaissance Technologies’ signature Medallion Fund—the most successful hedge fund ever. While Simons, former mathematician and code-breaker, did not really “solve” the market, he created a system conducive to extremely profitable trades. His success called attention to and validated the use of quant and trading techniques in money management.

In that context, a recent article contribution from Institute member Bob Mann seems very timely. The Institute is happy to have guest expert contributors that we will publish on topics important to our financial services readers.

Bob Mann, CEO of Advisor’s Capital Investments, is an author and expert on market cycles and a market technician with strong support for active money management. He makes his case in his article below for all investors, advisors and money managers to selectively borrow and merge trading tools into their investment methodology. He walks us through three specific trading methods and tools that have provided him with a consistency of results.]

Follow the Money: How Advisors And Asset Managers Can Take Advantage Of Smart Money's Big Moves by Robert Mann, CEO, Advisor’s Capital Investments

The stock market has had major gains. The long base stocks are now mountain charts. History suggests that risks are now very high. Fundamental valuations at two times sales also suggest stocks are overpriced based on historical norms. In my opinion, this is not a time for long-term index investing.

Some famous investors appear to have spidery sensors. They seem to instinctively focus on special situations before large institutions. For the rest of us, following the big money is easier and more scientific.

The largest institutions have amazing success trading profitably day after day in very large numbers. Stocks go up or down based on supply and demand. The great white whales of investing have a tremendous impact on stock movement. They have better information and they receive it faster than other market participants. They also see trade flows that others do not see and they have perfected their skills with AI systems and computer trading designed to enhance their odds of success. Like other great predators they feed on other market participants by knowing their habits. They take advantage of algorithmic traders and investors using stop orders. Often they are positioned already when markets open very strong or very weak. They seem to know market-moving headlines earlier than others.

How can you as an advisor or an investor take advantage by following the smart money?

I have found three valuable tools you may use to follow the smart money:

1.  Dark Pool Block Trades

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