...their trades are supposed to bully mis-priced assets into more reasonable valuations. That way, undervalued securities pick up in price, and overpriced securities are shorted down before they form a bubble. Though hedge funds failed to prevent the last two bubbles, it was not for lack of trying: Hedge funds bet against many tech companies, and many were on the right side of the housing bubble, i.e. holding CDS on the CDOs.
So, in essence, hedge funds either failed or are incapable of actually fulfilling one of their main social functions (to avoid "bubbles" by helping to achieve more "reasonable valuations"), but "hey, some of us tried!".
So, in essence, hedge funds either failed or are incapable of actually fulfilling one of their main social functions (to avoid "bubbles" by helping to achieve more "reasonable valuations"), but "hey, some of us tried!".