The firm's letters to the clients blame the market for not following trends, or for ignoring long-term economic fundamentals. This is an unlucky gambler blaming the cards, and the mass desertions show many clients have run out of patience.

Henry's astonishing fall from grace raises two thoughts.

First: Today's hedge fund kings justify their ridiculous incomes by arguing that if they don't perform, they don't get paid. But it's not quite true. These managers get 20% of the profits when times are good, but they don't then give that money back when times are tough.

A fascinating chart on Henry's Web site shows that, thanks to recent catastrophic losses, anyone who jumped into his main fund when it launched in 1996 and stuck with it until today has actually done worse than they would have in a fund that merely tracked the S&P, international stocks. Even 30-year government bonds fared better. Overall, they've done worse than a cheap index fund.

Henry collected huge fees from them early on. He has, of course, not returned that cash today. Indeed, while the clients' losses mounted last year he was out investing in a Nascar team.

The second thought is just how evanescent most hedge funds will be. Investors will find, so often, that there is no magic investment bullet. Today's superstars like to give their funds extravagant names, like "Raptor" or "Jolly Roger." I am not aware of any called Ozymandias, which seems a shame. Hail the fast money boys -- the kings of kings.
In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.

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