Article: Hedge funds: a reality check; hedge funds are supposed to reduce your risk. But performance tells another story. (Hedge Funds).

Hedge funds, in theory; are "market neutral." This means that, irrespective of what happens in the market, you are likely to come out ahead. This is because hedge funds hold investments that move in different directions: If one investment goes down, it is counterbalanced by another investment that is likely to go up at the same time. These funds have greater freedom in choosing what they want to buy or sell. They can go long or short, they can use leverage and they can buy or sell a variety of investments including options.

There have been hedge funds that have performed extremely well, the most outstanding example of this being the Quantum Fund, which was ...

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