Do hedge funds create investment bubbles?

Have hedge funds made markets work better or worse? With the explosion of hedge funds - there are no...

Have hedge funds made markets work better or worse? With the explosion of hedge funds - there are now more than 7,000, controlling almost $900bn in assets - there is no hotter issue in global finance. To some, hedge funds are reckless gamblers, using weird financial instruments to blow apart currencies and stocks, pushing up prices and creating speculative bubbles. To others, they are benign new pools of capital that help investors by spreading their risk, and they stabilise the market by taking up contrary positions. Who's right? A study in the October issue of the Journal of Finance, an...