Good story here, The Running of the Hedgehogs, a little long so I'll condense it some.

*Hedge funds show no evidence of passing, making this the most unrestrained financial moment in recent history.
*Hedge funds dates back to Alfred Winslow Jones and the fifties.
*There are more than 9,000 hedge funds, 351 of which manage $1 billion or more.
*Quirk and the Bank of New York predicts that institutional assets in hedge funds could nearly triple by 2010.
*Hedge funds can employ whatever investing tools they want, including leverage, the use of derivatives like options and futures, and short sales.
*Practically all financial institutions use these "exotic" instruments.

*The first hedge-fund-ers were people like Soros, Michael Steinhardt, and Bruce Kovne who were experts in commodities and currencies and figured out how to exploit inefficiencies in those markets. Because they raised money privately-largely from friends and business associates-they avoided most of the disclosure requirements of U.S. securities laws.

Here's a funny psychological bit; "According to a survey of 294 fund managers with a net worth of over $30 million by Fortune's Fortress, 54% of hedge-fund managers say they suffer from the Icarus syndrome, a fear of flying too close to the sun and crashing to Earth. They also think about staring down the barrel of a gun: Almost three-quarters believe their wealth makes them a target of criminals and 97% see their portfolios as themselves personified."

*Running your own hedge fund is the fastest way to make a fortune known to man.
*It's harder to start a hedge fund now than it was a few years ago.
*Hedge funds are more nimble than traditional long-only funds and can swoop in and correct market mispricings before they can get extreme, decreasing the risk of collapse.