One of the more interesting sideshows to this Wall Street meltdown has been to watch the actions of hedge funds. These predators have begun feeding on themselves. Hedge funds are now using trading strategies to profit from the unwinding of large positions by other hedge funds. Nimble hedge funds are shorting securities widely held by their rivals.
This cannibalistic behavior has been caused by the wave of redemptions hitting hedge funds. Because so many hedge funds hold similar positions (can you say lemmings?), forced selling by one hedge fund can have ripple effects, causing other funds to sell.
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