How the credit-crunch fallout hits both good and bad

Because of the recklessness of greedy bankers, every business in the world is being punished – even those who have been models of prudence. But those that survive could well deliver good earnings over the next few years.

Out of the thousands of hedge funds in existence, hundreds are closing up shop and liquidating, if the latest trading action was any indication. Many of these hedge funds should never have been started to begin with, because their illusory gains during the credit bubble were too often made with leverage, rather than analytical talent.

Yet their demise hurts anyone trying to manage an investment portfolio in a prudent manner - similar to how Bear Stearns and Lehman Brothers permanently stained the entire investment banking industry. It's a case of a few bad apples spoiling the whole barrel. Unfortunately, it remains to be seen how regulators and politicians will punish every investor, including those who have acted prudently.

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