| Sponsorship: Catching The Stocks The Pros Are Buying
Mutual funds and other professional investors represent the vast majority of trading activity in the market. As such, they wield tremendous influence on stocks, capable of sending their favorite stocks up significantly. Here, you'll learn how to spot the stocks benefiting from "institutional sponsorship."
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What Is Institutional Sponsorship?
There's a term on Wall Street everyone soon learns to appreciate: institutional investors. These are the mutual funds, pension funds, banks and other financial institutions that do the bulk of stock trading on any given day. It is estimated institutions account for about 70% of all trading activity. So when institutions target a stock for purchase, it's more likely to go up in price thanks to the increased demand they create. This professional stock buying is called institutional sponsorship.
Institutions make a living buying and selling stocks. They employ analysts, researchers and other specialists to gather comprehensive information about companies. They meet with executives, evaluate industry conditions and study the outlook for every company they plan to invest in. A few institutions are so skilled at using this expertise, they habitually outperform their peers. That's why their stock selections are widely watched.
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