by Paphitis » Fri Nov 23, 2018 4:43 pm
The Dow Jones is the market cap of all US companies listed on that indices.
Now, you say the the market increase on the Dow Jones is only 4.13%. That may be correct.
But the Dow Jones includes all companies.
Managed Funds do not invest in all companies and usually they don't invest in little small caps either or penny dread-fulls. They don't expose themselves to big risks where they can lose a lot of money in a bear market.
They usually spank to death the top corporates, like Google, Citibank, Tesla, Apple, Microsoft, Shell, BP, Commonwealth Bank, Westpac, National Australia Bank, News Corp, Boeing, General Dynamics, Ford, Daimler Benz, Barclays, Deutch bank, and so on. These are the so called blue chips. They don't speculate to make huge gains, to avoid the huge losses. They are chasing the long term growth and the dividend yields. Hence WHY they achieve 12%
During the reporting season, they jump from one to the other, just to cherry pick the dividend. That is why high dividend yield stock go up by a lot. and then drop when they go x dividend. They go for the yield and take a small loss on the trade, and they can do that 20 times in a week. They wire the money electronically within a nano second. And they are trading on volume.
A lot of these stocks are also safe havens in times like these.
For instance, right now, the smart money is going into the Australian ASX because that is where you will find the biggest GOLD producers and GOLD is the safe haven during times of war and uncertainty. Also the big global Banks that control the money.
This is where managed funds, institutional investors and the so called conservative and smart money goes.
Likewise, if the market drops 10%, they only drop 2%. Why? Because they know what to do and when to do it. Some of these funds are nearly worth a Trillion Dollars. They make a shit load of money too and they are rewarded on their performance too. And the better they perform, the more money they attract.