Stolly just to correct you on one thing. Firstly the SFA has only banned short selling in financial stocks, not the whole market, plus they've only banned it for 3 months.

I agree about the diversification but its worth pointing out a few other things, firstly many (and certainly the most successful) are not open to mere mortals, you need at least £500k to invest in some of them.

Secondly they are expensive, many were operating a 2 and 20 charging structure, ie 2% of assets management fee and 20% of outperformance of their target (nearly always cash).

Thirdly the market has become flooded with them with many mainstream fund management organisations offering them and like any asset class, that sees massive growth, performance tends towards the mean as opportunites become more scarce due to the weight of money chasing them.

Finally they can become very illiquid when you want your money out as lots of investors tend to want it out at the same time and already funds are putting time bans on redemptions of up to 6 months.

There ends the Bladerunner lesson on hedgies