You Don't Need To Invest In Hedge Funds To Have Investing Success

This chart shows the return of a simple portfolio that holds 60% in a simple S&P 500 index fund and 40% in a global bond index fund vs. the returns of the hedge fund industry over the last 10 years.

What this tells you is that it is hard to beat the market. Hedge funds hire some of the sharpest minds on Wall Street and charge a fee of 2% per year plus 20% of the return they make. If they can't beat the market, what makes you think that you can, or your broker, or the neighbor who tells you he is making money hand over foot?

The lesson for most investors is to hold stocks that look very much like that of the overall stock market (the S&P 500 or a Total Market index fund will do) + a portion of bonds that look like the overall bond market. Hold these in a proportion that is right for your risk tolerance, minimize taxes (holding a stock index does this very efficiently), keep fees low (index funds do this better than any other funds) and you will have a high probability of outperforming the average investor over time.