What Good Are Hedge Funds?
What Good Are Hedge Funds?
Hedge funds make big returns by manipulating markets in ways that are illegal for small investors. Remind us: Why are they permitted?
David Dayen
April 25, 2016
In the pilot episode of the Showtime drama Billions, a CNBC host grills Bobby Axelrod (Damian Lewis), founder of the hedge fund Axe Capital, at a public forum. “How do you respond to the criticism that hedge funds are the scavengers of the financial sector, and that a select few have undue influence on the markets?”
“We’re not scavengers,” Axelrod replies. “We’re white blood cells scrubbing out bad companies, earning for our investors, preventing bubbles. A hedge fund like mine is a market regulator.”
This claim invites an important debate: Do hedge funds represent an asset to the larger economy, or a menace? Do they really help make markets more efficient and transparent, or do they just exploit opportunities at the expense of other investors?
There are roughly 11,000 such funds—investment vehicles that control a mix of client dollars and borrowed money, with a corporate structure that exempts them from most investment-company regulations. We know that hedge funds have made a small subset of financial titans fabulously wealthy. The top hedge fund executives make a billion dollars a year or more. Hillary Clinton and Bernie Sanders are fond of saying on the campaign trail that the top 25 hedge fund managers earn more than all of America’s kindergarten teachers combined. But does this orgy of wealth create value, or merely extract value, at the expense of workers, companies, and other investors? ..............(more)
http://prospect.org/article/what-good-are-hedge-funds
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Investing implies you expect a company to grow because of the return on the selling of products or services. This is why we hear the "investor takes all the risk". It isn't true due to legislation, but that's for another discussion.
Hedge funds are hoping businesses fail. 
Hedge fund managers bad talk companies and cause problems where there are none resulting in losses for others and making it more difficult for a company to succeed.
The stock market itself is nothing more than gambling. Buying low and selling high the same stocks over and over again isn't investing, it's betting a person will get lucky and buy it low and watch it go higher instead of lower and also making enough to pay the transaction fees.
200 day moving averages? 52 wk highs and lows? What do those have to do with the company's strategic growth plan? 10K or Q filings? inventory stock piles? decreasing or increasing demand for a product or service?
