Oil Price – Much of the fury in this morning’s nearly 60 point “melt up” opening in the Dow was generated by hedge funds panicking to cover shorts. Convinced of the imminent collapse of Europe, the impotence of governments, and the death spiral in sovereign bonds, many managers were running a maximum short position at the opening, and for the umpteenth time, were forced to cover at a loss. Meet the new dumb money: hedge funds.
When I first started on Wall Street in the seventies, you heard a lot about the “dumb money.” This was a referral to the low end retail investors who bought the research, hook-line-and-sinker, loyally subscribed to every IPO, religiously bought every top, and sold every bottom.
