[PeterPrinciple]

There are no hedgers involved in this, it is ALL speculation.............and it is causing chaos instead of stability.

[Protagoras]

These rogue free enterprise businessmen must be reined in. They have somehow escaped 10 pages of the 6,290,063,098,111 pages of regulations required of everyone else in the investing business and MUST be controlled!

< /sarcasm>

[thinking4me]

alas, this is what happens when everything is backed by debts, when some only get richer when others must pile on debts. The entire world economy is an illusion... debt based economies = the top sucks the bottom. The savings rate is now zero % in the US. The problem is that the Top today has nothing anymore and this is why "they" came up with the new bankruptcy bill. Soon slavery at its finest will take away from you your dearest American dream.

Yes, returning to the gold standard will be costly, not because of the gold standard itself but the money printing press that is inflating everything. Truth is always painful anyway. Eventually we'll be forced to embrace US CONSTITUTIONAL MONEY AGAIN one way or another... the the day we do so, it might come from "We The People", who are fed up with all these booms/busts/recessions/depressions... YEAH, ECONOMY ALWAYS COMES BACK... AFTER THE BUST. HERE WE GO AGAIN?

THE ARCHITECT OF OUR CURRENT MONETARY SYSTEM: "Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed." -- John Maynard Keynes, "Consequences of Peace." STAY UPDATED: WORLD GREAT CRASH ALERT

If you're living in NYC and wish to volunteer for the cause of sound money, please get in touch with me.

[RushCrush]

Troll?

[Uncle Miltie]

Hedge funds are comparatively small. What I want to know is why is so much money chasing the non-productive asset real estate to the relative exclusion of productive stocks?

Why and how can real-estate screem ahead without being funded by the wealth built by profit making enterprises? It seems only temporary enthusiasms (read: bubble), an unusual interest rate environment (read: "loose money") or major market preference shifts (read: "nesting" or "retirement home") could account for the disconnect between productive wealth generation and housing prices.

When that dichotomy is resolved, me & my portfolio will be much happier.

[Patinator]

The number of hedge funds that exist as reported by HFRI is really about 4,000. The 8,000 number that has been continually perpetuated includes fund of funds. Fund of funds collect money from investors and then allocate those funds to hedge funds. If hedge funds did not exist, fund of funds would not exist.

It is true that the number of people starting hedge funds has skyrocketed, but that in an of itself is not a bad thing. However, 80% of hedge funds invest in equity and 80% of them employ a long-short strategy (data from HFRI). In other words, 64% of the 4,000 hedge funds are in long-short equity. Sure, they are many industries they can focus on, but if there is a shake out in the industry, I think it will be in long-short equity.

Is 4% or 5% in a different asset class by the retirement systems a bad thing? Since hedge funds are supposed to be non-correlated with other investments, this is called diversification by most people. From the Virgina Retirement Systems website, in 2002, their US equity holdings experiences a 16% loss or $2.9B. Gee, this is larger than their entire hedge fund allocation of $1.6B. Oh, their 5 year return for their equity portfolio is -.3%. One of the biggest reasons that just about all retirement systems are investing in hedge funds is because they were overexposed to equities in 2000, got their butts kicked and are now underfunded.

What is so comical about hedge fund bashing is that you will only read about it as a scapegoat for when the market hiccups. Have you ever read about how hedge funds are responsible for when the market rallies? If they are so powerful, why do they only have a negative effect?