" (FINalternatives, 2007) Hedge funds rose 3.27% in September in what is stated to be "the largest increase in four years, and the second largest in eight." (FINalternatives, 2007) the gains are also stated to be broad-based gains. The problem is however, that there is simply not a historical track-record of hedge fund returns to utilize in attempting to predict if these gains are likely to remain or be replaced by losses even greater than over the summer of this year. A discussion of the Financial Economists Roundtable's annual meeting reports the rapid growth of hedge funds in the last decade....

The Financial Economists Roundtable is comprised of a group of senior financial economists with a focus on microeconomic issues in investments, corporate finance and financial institutions and markets. However, the unregulated nature of the limited partnerships do lead to concerns including the high expenses in managing these funds and the risky strategies associated with investment of hedge funds and the "small probability of very large losses." (Stanford University, 2005) Investors often fail to understand these risks as well as others connected to hedge fund investing. Another problem with