what is smart money 
smart money is the capital that is being controlled by institutional investors market mavens central banks funds and other financial professionals smart money was originally a gambling term that referred to the wagers made by gamblers with a track record of success understanding smart moneysmart money is cash invested or wagered by those considered experienced well informed in the know or all three there is little empirical evidence to support the notion that smart money investments perform better than non smart money investments however such influxes of cash influence many speculation methods the term smart money comes from gamblers who had a deep knowledge of the sport they were betting on or insider knowledge that the public was unable to tap into the investing world is similar the populace perceives that the smart money is invested by those with a fuller understanding of the market or information that a regular investor cannot access as such the smart money is considered to have a much better chance of success when the trading patterns of institutional investors diverge from retail investors smart money also refers to the collective force of big money that can move markets in this context the central bank is the force behind smart money and individual traders are riding the coattails of the smart money in the context of gambling smart money refers to those who earn a living on their bets many gamblers use historical mathematical algorithms to decide how much and on what to wager identifying smart moneyto identify smart money one should look for the following signs knowing how to spot smart money does not mean one should refrain from conducting their own research and analysis before making any investment decisions tracking smart moneythere are several ways to track smart money in the financial markets some methods include the scale of smart moneyinvestors with large followings such as warren buffett are considered smart money investors but the scale of their activities is not always taken into account when the cash reserves at buffett s company berkshire hathaway accumulate and are not invested this is definitely a sign that buffett does not see many value opportunities in the market however buffett functions on a different scale a 25 000 investment is not too significant in a billion dollar portfolio buffett s smart money acquires companies rather than takes a position institutional investors of buffett s size need scale for overall portfolio impact therefore even when the smart money is out of value picks in the current market conditions it does not mean that opportunities particularly for modestly sized stocks are absent 