What it means when the professional money managers lag (And don’t forget today’s chat)

All year I’ve been writing about how most of my contacts who are professional money managers have been very bearish and pessimistic about the markets all year and how that, technically-speaking, is a contrarian indicator. Here are three articles about just how badly the pro’s are performing this year:

Hedge Fund Returns Worsen: Is ‘Enormous Unraveling’ Near? CNBC.com – ‎Oct 1, 2012‎ “Could the underperformance be cyclical or is there a structural change that has changed the return structure of returns for the hedge fund industry?” Mary Ann Bartels, technical analyst at Bank of America Merrill Lynch, … Hedge fund manager and author James Altucher predicts more trouble ahead, in which there will be “an enormous unraveling of hedge fund assets at end of year when hedge funds open their doors and this will lead to a bad Q1 in 2013.” From the end of 1994 until August, globally diversified hedge … Hedge Funds Lagging S&P 500 by Nearly 11% aiCIO – ‎Oct 1, 2012‎ “Could the underperformance be cyclical or is there a structural change that has changed the return structure of returns for the hedge fund industry?” Mary Ann Bartels, head of technical and market analysis for the bank’s research arm, asked in her report. Relative hedge fund returns worst since 1997 Financial Post – ‎Oct 1, 2012‎ Ms. Bartels said the underperformance could be cyclical but is more likely a structural change that has changed the return structure for the hedge fund industry. “We continue to conclude as in prior research, there is likely too many hedge funds chasing to few …

Now there’s never any sure thing, but I’d expect that we’ll see at least one more serious push to the upside, maybe another 5-10% on top of the 33% that the Nasdaq is already up in the last year before year end. Whether we end on the highs of the year or if that push comes earlier and then we fade for a while into year end is probably the question. I’ve been trimming down and raising cash as we’ve had a great year because we weren’t bearish and pessimistic. But unless a crash comes soon, those money managers are going to have to chase these stocks at some point.

It’s tough to look past the headlines and the panic and the worries and the handwringing and the fear that come with risking your capital at any time and it’s been very hard for most people the last couple years in particular.

One of the most important services that TradingWithCody.com provides is help with that.

Making the hardest trade is indeed usually the right one, and we here all know just how hard it’s been to buy the panics and how hard it’s been to sell the euphoria and relief. Patience and waiting for the right pitch has also been tough. Look at the pro’s.

And don’t forget this week’s Live Q&A at 2pm EST at https://tradingwithcody.com/chat. You can email me your questions to support@tradingwithcody.com too.