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more assets a fund has, the more difficult it may be to get out of wrong trades. Also, trading and decision making may become more diffuse.

A transition took place in 2000. The markets are whipsawing and unpredictable. This may mean more difficult markets for the inexperienced hedge fund manager without a long track record. The short side of the equation—where the manager may have no experience—may become more important. Furthermore, the stock market is becoming more complex with considerable variation in the market sectors. This is making the stock market more difficult to hedge.

Today, the perception is that many of the newer/younger managers are motivated by incentive fees and having considerable assets under management, rather than providing excellent returns. This attitude has negative consequences in the long run. If the markets continue to be challenging, it is quite possible that a shakeout of sorts would occur in the industry.