Jim Cramer say Stock Market Controlled by "Hedgies"

[Bill Verburg]

Personally I don't worry about what the market is going to do, or the theory de Jour I have an appropriate asset allocation and re-balance periodically.

A very worthwhile read

[hytem]

Originally posted by Wayne at Pelican Parts
That's not necessarily true - mutual funds don't trade on exchanges like stocks, they are traded on their NAV value - which is the sum of the underlying assets (stocks, bonds, etc.). So volatility in them is reflected in the assets that they hold, not in wild trading of the fund itself. Trading the funds themselves actually reduces the volatility because the swings are averaged over different stocks or asset classes. If a mutual fund seems volatile, it's most like because there has been volatility in the underlying asset class, and/or the mutual fund is widely exposed (not balanced) to a particular stock, bond or asset category (like energy, or tech).

-Wayne

Mutual funds now have permission to place restrictions on selling shares, which is an acknowledgement there is a problem. I know that has happened in the funds of some investment companies I'm involved with.
Big investors own large blocks of mutual funds. When interest rates move up or down, it triggers a sell or buy in their computer programs--that multiplies the affect on individual stocks. Fund managers would like to dampen that. Some have a tough time dealing with large inflows and outflows of money. And the capital gains situation becomes a pain in the neck for the small investor, unless your investment is tax-sheltered.