Hedge--Don't Hog

Lessons from the flop of an infamous fund: trim risks, do your homework and don't get greedy

Did you perspire when you read the stories about the recklessness of the hedge-fund managers at Long Term Capital? Did you check out the mumbo jumbo in the prospectus of your mutual fund to see if it might be using your nest egg as collateral to borrow millions to bet on, say, the 49ers game? Relax. The securities regulators are better than you think. They worry more about you than about the folks who invested in Long Term--the sort who can drop $10 million without having to sell their jets.

Mutual-fund regulations prohibit the kind of leverage that drove Long Term...

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