John Robb's Radio Weblog

A hidden engine behind the stock declines (as opposed the obvious engine:  the malfeasance of America's corporate executives) are hedgefunds that control $560 b in assets for the extremely wealthy (this is double 2 years ago).  These unregulated and secretive funds are heavily shorting the market, driving it lower.  The upshot is that as wealthy individuals get wealthier in the short term due to these actions, the process is helping to harm the market's long-term prospects and perhaps the economy in general.  The presence of so much money in opportunistic, leveraged funds is troubling.  These funds ride trends (up or down) and often accelerate and or exaggerate their impact.  Given that the current trend is down, we can expect it to get much worse than it would have been given the aggressive actions of these funds.  Further, it adds to the image that the US markets are only a playground for the wealthy or “the connected” and not a place for individuals and their hard earned dollars. [John Robb's Radio Weblog]

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