Despite the uncertain economic climate, hedge funds are rebounding after a rough summer. The mercurial atmosphere is actually helping stock pickers play the markets, the Journal reports. The smart ones predicted the mortgage crunch and are making out well from oil and currencies. "The good managers are taking advantage of the market's volatility," says one hedge fund investor.
Hedge funds raked in $164 billion in the first three quarters of 2007, breaking the full-year record but raising questions about the balance between size and returns. Some contrarian funds that shorted stocks as the markets zoomed up are reaping rewards now, and many big-name funds are doing likewise. Meanwhile, fund launches are down around the world.