Debilitating Capital Losses...Not just for the Rich Anymore

Here is a great Bloomberg article chronicling the latest instance of an investor herd failing to alter its navigation so as to avoid a large precipice. Here is the key sentence:

"Declines in these mutual funds are approaching the $6 billion loss at Amaranth Advisors LLC, the Greenwich, Connecticut, hedge fund that bet wrong on natural gas, which has dropped 59 percent this year. Hedge funds are private pools of capital that can only accept money from individuals with more than $1 million because regulators figure they can take more risks than people in mutual funds. "

Heck, who needs to mess around with secretive, unregulated, only-for-the-rich hedge funds when you can lose your shirt just as easily in non-secretive, regulated, fit-for-average-consumption mutual funds.

Bad investment decisions are an equal opportunity affair, open to all. Still I doubt this will blunt the instinct in our Great Sausage Factory to extend regulation to the hedge fund industry.