Is there such a thing as smart money?

THE new movie Dumb Money tries to turn Wall Street’s pecking order on its head, casting professional investors as the dummies and amateurs as the smart ones. Set during the meme-stock craze of 2021, the plot ends before the real life story did – with losses for the retail investors who tried to outsmart big hedge funds.

Sorry Hollywood, the underdogs did not win. The movie did, however, leave me pondering a bigger question: is there such a thing as “smart money”?

Certainly, most pros don’t beat the market either, and this has been true for decades. Since 2000, there have only been three years in which a majority of large cap funds outperformed. In the 2010s, on average, eight out of 10 mutual funds and nine out of 10 institutional funds underperformed in the US markets, after fees.