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Anurag -

Here's the problem with the idea of the disappearance of hedge funds...
Most people in the US use mutual fund/investment funds for their retirement portfolios. The problems of the pension plans and social security are well known - consider the drastic cuts of pensions in airline and auto sectors and the enormous government tax & expense in running the social security program.

I realize that this election along with the collapse of many 401k retirement accounts will prompt government action after the election. The question is whether or not they will stay with the 401k, stock market model.

In my opinion, the government will not be able to create any kind of drastic switch - unless Obama gets in with a democrat house & senate causing frightening new levels of government expansion.

Politics aside, the retirement account money needs to go somewhere, and I don't think it will settle for the long term in low-yield safe havens, especially when inflation begins to rear its ugly head once again. The average person still has control of where the bulk of his own retirement goes in this country, and many will settle for the advice of the mutual fund/401k managers in the long term - which will keep the big institutional investors alive. As for Hedge funds in particular, I don't think they'll disappear as an industry when there are still some with amazing performance such as Soros with his heavy shorting and the incredible liquidity of Buffet.

The future will not revert to the past ... we have the internet with a vast array of knowledge available to the common public, stock trading online, etc... the information age will continue on and people will adjust to something that makes sense in the current age. With the markets of today I seriously don't think it will be long-term single-digit PE's.

Hence, I will keep even my low- or no-yield growth stocks such as MPEL, GIGM, CBI, SLT, GSI, KHD, etc rather than dumping them for the current high-yield bargains. New cash will go to the high-yield bargains while they last, however. And yes, I am seriously thinking of borrowing to invest in stocks of strong, steady companies giving high yields - fortunately, however, I have a little cash left to buy with. The market crash may be quite a bit deeper, but that won't change the fundamental value of a high-yield stock in a steady industry with a safe dividend such as utilities, fast-food, discount retailers, cola or beer companies or other such giants that won't die out in a market slump.

The future is far from certain, best of luck in whatever strategy you choose.

-John T
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