It's no secret that hedge funds both large and small are having a rough year. Is the pain about to spread to retail customers? Business Week certainly thinks so. "In the coming months, hundreds of hedge funds may shut their doors, sparking a massive fire sale on all sorts of investments. Just about anybody with a 401(k) or pension plan will feel the pain, since the sell-off will only exacerbate the plunge in stocks, bonds, and commodities--which make up the core of most people's portfolios." That's dire. My sense is that it will be a bit more orderly than an all-out asset dump. You can bet there's an awful lot of negotiating going on right now. Hedge fund execs likely have never been so humble. Big institutions would be wise to use the situation to gain leverage and better terms.

For more:
- here's the Business Week article

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