Jim Cramer’s Amateur Indicator

By on July 9, 2010

Investors are forever searching for the holy grail of indicators. Jim Cramer highlights one that is interesting, but probably won’t lead investors to beat the market.

It has to do with investing in the large holdings of market beating mutual funds. The idea is that amateur investors will pile money into these funds adding to the buying pressure of the fund’s top holdings.

Supposedly it will lead investors to market beating stocks if the portfolio managers can’t come up with new ideas and continue to add money to their most heavily weighted stocks, creating marginal buying pressure. However, it’s primarily a momentum-based method of investing which would require constant monitoring.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>