A hedge fund is a private, loosely regulated, pooled set of investment monies managed by an individual or business for the benefit of the wealthy clients who contribute money to the pool. Hedge funds use a broad array of investment strategies, many originally conceived to protect a portfolio of stocks from the risk of a large market downswing. Alfred W. Jones, an American writer and financial journalist, is generally credited with creating the first hedge fund. In 1949 Jones created a fund that used leverage to buy or “go long” undervalued stocks, while simultaneously “short selling” overvalued stocks. By simultaneously buying some stocks and short selling others, Jones's portfolio was largely immune to general market swings. Today, hedge funds employ aggressive and sometimes speculative ...

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