The Upper Hand

Understanding speculative capital may be the key to explaining why some hedge funds lose money.

Hedge funds are supposed to make large sums of money. That, in any case, is the general perception. But not all hedge funds make money all the time. In fact, each year quite a few of them close their doors. The annual turnover rate within the industry — net of new funds starting and old ones folding — remains at about 10 percent.

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