As hedge funds buy Apple and Pfizer, should individual investors follow?


There are many theories about investing and one of the simplest focuses on the momentum generated by big traders. Some momentum investors simply follow the smart money -- hedge funds and other Wall Street traders -- and hope to earn big returns from the stocks they love, regardless of their fundamentals. If you like the smart money momentum approach, you might want to look at Pfizer (PFE) and Apple (AAPL).

According to Bloomberg News, the smart money is plowing cash into stocks right now. Hedge funds added 21% to their stock stakes, totaling $604 billion, in the third quarter. Meanwhile, individual investors (who account for 82% of mutual fund investors) withdrew money from stocks -- pulling $37.3 billion from U.S. mutual funds since August.