With 2005 just around the corner, Wall Street’s so-called “dumb money” and “smart money” are actively placing their New Year’s bets.

The public or the individual investor is viewed as the dumb money, while corporate insiders are considered part of the smart money crowd. Based on their latest stock activities, the two camps are sharply at odds.

Take the public. Individuals are obviously gung ho on the market, having gone on a buying binge in which they snapped up about $12 billion worth of equity mutual funds last month. And their latest buying trend – $2.2 billion a week the past three weeks – suggests roughly another $9 billion or so of stock purchases this month.

On the other hand, insiders, according to just-released figures from Thomson Financial, have embarked on one of their biggest selling outbursts in more than four years, unloading $6.6 billion worth of stock last month, a 180% increase over October’s sales of $2.3 billion. The November selling represented insiders’ highest sales volume since August 2000 when they dumped shares valued at $7.7 billion.

Not only that, last month’s sell/buy ratio – which measures the dollar amount of shares insiders sold, versus the amount they bought – turned in its second worst reading in five years. Normally, insiders, largely reflecting the issuance of options, sell $19.13 worth of stock for each dollar’s worth they buy. Historically, a ratio above $20 to $1 is considered very bearish, while below $12 to $1 is regarded as quite bullish.

The November reading – a frightening one for the bulls, an astronomical ratio of $46.45 to $1 – clearly signals that the majority of officers and directors who run Corporate America essentially want out of the market, or, at the very least, to sharply reduce their stock holdings.

Why the meteoric rise in insider sales? Some pros cite the following:

* The belief that next year’s economy and earnings may not live up to Wall Street’s exuberant expectations.

* A rising level of interest rates.

* The plummeting greenback and the prospects of continued dollar weakness because of budget and trade deficit woes, which could prompt overseas investors to shun the American market, as well other foreign investors to further reduce their American stock holdings.

November, it should be pointed out, is one of the stronger months for insider sales. This reflects pent-up selling after third-quarter earnings-related restrictions in October have been lifted and the effects of tax-loss selling to offset gains.

However, the folks at Thomson say the magnitude of November’s insider selling surge was considerably greater than expected and was particularly noteworthy since this sales craze ran across all 13 market sectors it tracks. Significantly, too, insider sales went through the roof in three of the market’s most important stock sectors. The areas and the sales:

* Technology insiders dumped $1.5 billion worth of tech shares in November, a month-over-month increase of 94% and the highest in three years. Tech selling has not been this strong since May of 2001. In comparison, the five-year monthly average for tech sales is $960 million.

* Finance executives sold $882 million worth of their own stocks in November, a 295% increase from October and more than double that sector’s five-year average for monthly sales ($360 million).

* November’s health care insider sales jumped 150% from the prior month to $734 million in November, its strongest monthly volume since February and nearly double its own five-year average ($353 million).

From a market cap perspective, mid-cap companies (those with market capitalizations between $1 billion and $5 billion) experienced the strongest increase in executive sales last month as their volume more than tripled from $628 million in October to $2.2 billion in November. Meanwhile, in the cream of corporate America, large-cap stocks, insider sales more than doubled to $2.6 billion.

Okay, so who’s right, the smart money or the dumb money? I’ll let you tackle that one, but as one West Coast money manager put it: “You’ve got to be wary; they don’t call the public dumb money for nothing.” Meanwhile, it’s noteworthy that insiders have essentially been sellers throughout a mediocre 2004, in effect re-enforcing their smart money designation.