Do exotic trading strategies associated with hedge funds increase the volatility of the stock markets?
DM: It’s hard to say. Hedge funds do engage in greater-than-average trading activity. But it’s unlikely that they’re the proximate cause of something like the rapid rise in oil over the past several years. The specific causes of that — tension in the Middle East, growing demand from China and India, weather-related demand shifts — are not the doing of hedge funds but the result of all sorts of geopolitical, economic, and other factors. Of course, hedge funds have no problem trying to capitalize on that volatility. NOW: Can you describe the dinner Senator Schumer orchestrated in late January for the top hedge-fund managers and why this meeting was significant? DM: Having not actually been at the dinner, it’s hard to relate much more than the brief recollection of one of the attendees. Schumer’s message was essentially that the hedge-fund community should think long and hard about being a little more forthcoming with the government, with the implicit threat that if they didn’t voluntar
