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Taking on more types of investment risk does not reduce overall investment risk; especially when heavily leveraged.

Wall Street is gearing up for its next money making disaster—as they have pretty much finished up with subprime-junk-mortgage-backed securities, for which we thank them all—by offering investors yet another way to satisfy their unquenchable thirst for high risk investments that will probably result in 100% loss of capital.

What could be easier; hedge funds.

Use other peoples hard earned money, take extraordinarily high investment risks with other peoples' money, pay yourself exorbitant base fees and performance fees for your so-called expertise from other peoples' money; the results of which are more a function of taking a multitude of extreme investment risks with the hope that one will work out rather than the result of astute analysis and correctly predicting and managing the one 'best' investment risk; the one which still probably has a no better chance of success than rolling 4's the hard way.

Tell investors that the advantage of hedge funds is that all types of investments, investment strategies, and investment tools may be used to anticipate and to take advantage of all types of conditions and changes in the markets and, therefore, increase the opportunities for capital gains while actually reducing investment risk because of the number of risks that are being taken(?).

Don't tell them that no one can accurately anticipate and take advantages of all types of conditions and changes in the markets.

Don't tell them the overall performance of all hedge funds.

Don't tell them that they will probably lose all of their money.

Keep current hedge fund valuations vague; what a thrill for the investor to never really know where he or she stands—that is until it is too late.

Mention the few extraordinary hedge fund performance exceptions.

Leverage to the hilt; hit it big, more fees and investors will have more capital to reinvest.

Fail, more fees because investors, hearing a 'new and improved' hedge fund story will find new capital to invest.

If the hedge fund is successful, promote it to gather more capital.

If the hedge fund fails, change the name of the firm and promote it to gather more capital.

The few investors that made money in hedge funds will come back.

The majority of investors who lost all of their capital will come back with the hope of getting back to even and then invest in another hedge fund.

If they lose again, well, they can just skip retirement.

P.T. Barnum would be oh so very proud.