Great article, Bill. Here is the comment I sent to the WSJ:

.................

Brett, why so pessismistic?

Just think about some of the things you said:

“In fact, during the stock market collapse of 2000-2001, hedge funds provided excellent returns to the lucky few when most investors were getting clobbered. Such moments of relative virtue far outweigh the few, small scandals.�

--> How, exactly, is a lucky few making a ton of money while most investors get "clobbered" a moment of virtue?

“Mr. Cara suggests a complete regulatory make-over to eliminate the many conflicts of interest that characterize the securities industry. Putting aside that such a re-do is politically impossible …�

--> Why is it politically impossible? Its not like Bill is asking the regulators to turn water into wine. He is merely suggesting a revised structure to remove obvious conflicts of interest. It most certainly is politically possible. Where there is a will, there is a way. Your position is lazy and apathetic.

“That said, the SEC should raise the current income and wealth tests for hedge fund investors. They are laughably low.�

--> Are you kidding me? Less than a tenth of all people in the United States could be considered accredited investors.

“Unfortunately, no government institution short of a global, omniscient regulator is likely to nab a future LTCM in advance.�

--> More pessimism. Why do you think no institution could nab a future LTCM in advance? I guess you would rather just rush headlong into every crisis as it happens. That's shortsighted. Have you never heard the old saying?

“An ounce of prevention is worth a pound of cure.�

Outstanding work.

Mr. Brett Duval Fromson wasn't a worthy opponent for you. WSJ will have to try harder next time or be completely embarrassed.

Bill,
This exchange regarding hedge funds is sobering.

Although I have never invested in a hedge fund, I did not understand that they are ILLIQUID, private partnerships controlled by the general partner. Although it was not stated explicitly, I came away with the belief that the general partner can use unlimited discretion in the management of investor money.

The suggestion that most investors know the abilities of the persons who are managing their hedge fund investments, is ludicrous. The general partner could be a genius or a fool, honest or a fraud, and most would not know which.

Mr. Fromson's belief that the general partner's motive for profit will protect the interests of limited partners is unsound. This structure encourages the general partner to take risks that are grossly disproportionate to potential profits. This endangers the investments of the limited partners.

Thanks for the continuing education.