Too many hedge funds? Don’t count on it

Too many hedge funds? Don’t count on it - at www.moneyweek.com - the best of the international financial media

Go to Google. Type in 'too many hedge funds.' I get within about 0.37 seconds 365,000 references. It is the hedge fund topic du jour. 'Are Hedge Funds Ready to Blow?' asked Kiplinger.com last summer (July, 2004) My good friend and normally sober-minded Brit, James Montier worries in a recent essay that the growth in hedge funds is another bubble on its way to meeting a pin. Bill Gross of Pimco wrote last year: 'But it's not just the competition and costs that should spell the eventual demise of the hedge fund craze. It's the realization -- advanced here perhaps -- that hedge funds can be manufactured in everyone's backyard like a gallon of Kentucky moonshine with revenue stamps attached, no less."

Steven Galbraith, principal at Maverick Capital, a leading hedge fund, recently was quoted as saying that, "The barriers to entry in this business are nonexistent. It's roughly equivalent to creating a lemonade stand."

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