Adventures in Capitalism

About the Author Adventures in Capitalism

My Name is Harris Kupperman and I’ve been successfully investing in the markets for over a decade. In 2003 I started a hedge fund, Praetorian Capital, so that others could invest alongside me. During nearly a decade in existence, the fund has continued to grow with the majority of the capital increase the result of performance—not inflows. This success is the result of the strategies that I talk about in this website. The fund is CLOSED to new investors. No Exceptions! Besides, why pay me fees when you can invest alongside me for free. I am also the CEO of Mongolia Growth Group (YAK: Canada). I cannot talk about the company on a public website like this, however, if you want to learn more about the company, please visit our website at

Follow the Smart Money: How the Pros Are Trading Right Now


By Frank Holmes

No matter what profession you’re in, no matter what sport or hobby is important to you, chances are good you keep track of what the top professionals are up to. More often than not, they’re the smartest ones in the room. They’re the innovators, the thought leaders, and it pays to keep up with their decisions, behavior and opinions.

This is especially true in investing.

The most recent chief executive officer to receive such compensation is American Airline’s Doug Parker.

Anyone can give you tips on how to get ahead in the market. Maybe you’ve even dispensed some sage advice to friends and family yourself over the years. No offense to you, your cousin or your neighbor, but before making any trading decisions, it’s usually constructive to first figure out where the smart money is headed.

But where do you go for such data? A good place to start is the bull/bear ratio.

Since 1987, Investors Intelligence has released such an indicator on a weekly basis that tracks the market sentiment of professional traders. High readings indicate bearishness; low readings, bullishness.

Currently, the ratio’s 52-week moving average stands at a record high of 3.5.

Bullishness Among Market Professionals Is Extremely High
click to enlarge

For the past decade and a half, this indicator has been more-or-less accurate at following the peaks and valleys of the S&P 500 Index. When the index plunged dramatically in 2008-2009 with the rest of the market, pro investors, motivated by cheap stocks and the huge potential for growth, became bullish.

The reverse is also true. The bull run we’re now in is six years old—one of the longest in U.S. history—and domestic equities are at record highs. What’s helped push the market higher this cycle are low interest rates and billions in dividends. For the first time last year, U.S. companies gave back $1 trillion to investors in stock buybacks and dividends, and even more is expected this year.

As a result, some top traders seem to be anticipating the next shoe to drop.

Market sentiment among Professional Investors vs. the S&P 500 Index
click to enlarge

So what does this mean? Of course, there’s no way to predict what will happen in the future with full certainty.

Having said that, it might be time to rebalance your portfolio by taking some profits from the best-performing assets and reallocating them into assets that are out of favor right now—or better yet, into a product that has a time-tested history of no drama. Research has shown that a systematic approach to asset allocation with regular rebalancing might lower your risk and enhance your returns.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

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