Originally posted by ThomasSoerensen
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What hedge funds do has zero economic point in this sense, what's worse is that they are so big now that they actually affect market significantly and I'd say their actions should be viewed as market manipulation. Finally they don't even have the money with which they screw up everyone - they are usually heavily leveraged, this is necessary for them because they want to reach scale high enough to manipulate market - say with some companies at some points 15-20% of their stock was shorted, if you are proper investor and want to buy so much you'd have to declare who you are, etc - it's a big shareholding and it should not be secret, those guys however operate with huge proportions of companies without any oversight - it should not be allowed.
The simple question is this really - if hedge funds were all closed and everyone involved in them fired, shorting banned, then what would the society lose as the result? I don't think losses will be high, frankly gains are rather obvious and given hedge funds involvement in current malarkey it would only be right to close them down en masse.
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