Three Mile Island in Hedge Fund Land

The hedge fund business just experienced its own personal Three Mile Island. At least we hope the Long Term Capital debacle is just Three Mile Island, and not Chernobyl, which would shut down all investment in unregulated managed pools.

Like Three Mile Island, which virtually eliminated the possibility of more nuclear power plants being built in this country, LTCM will prevent anyone from ever again amassing a leveraged sum that far exceeds the boundaries of common sense, let alone the margin requirements. Unfortunately, unlike Three Mile Island, the fallout in hedge fund land hurts those of us who run by hydro or natural gas or plain old No. 6 oil to generate solid returns.

That's too bad, because what I do for a living has nothing to do with what the geniuses at Long Term -- and I use that term loosely -- claimed to be doing, or were actually doing with investors' dollars. I am a stock picker. If I find a stock that I think will go up, I buy it. If I find a stock that I think will go down, I sell it. Occasionally, I borrow money from a brokerage house to buy something of terrific value, but it is never more than can be returned rather promptly -- read tomorrow -- to the lender. ...