Today's Outrage: Don't Mourn for Hedge Funds

It seems like the heady days of hedge fund hell are coming to an end.

JPMorgan Chase (JPM Quote) is closing down its hedge fund business and two Boston funds also decided to give up the game.

Apparently, the opportunities are drying up for hedge funds, which some say profit by manipulating the market with short sales, derivative plays and leveraged positions. (The truth is that nobody really understands much about what hedge funds do because they operate largely outside of the normal regulatory environment).

One way to interpret the decision by JPMorgan to exit the hedge fund business, following similar moves by Credit Suisse (CS Quote) and Deutsche Bank (DB Quote), is that big banks are refocusing on businesses they actually understand.

This could also be a correction in the market, which became overrun with hedge funds.

For a while there, new hedge funds seemed to be springing up all over the place. Along with JPMorgan, Citigroup (C Quote), Bank of America (BAC Quote), Wells Fargo (WFC Quote) and Goldman Sachs (GS Quote) all joined the game, directly or indirectly or both. And they spawned many more hedge funds as their top traders left to start their own funds in search of even more wealth and glory.

With more than a trillion dollars in the hedge fund universe, we're talking about an incredible accumulation of market-moving potential.