I could have sworn that "hedge funds" were toast last year. Their business model was being seen to be the fraud that it is, and their performance was not living up to expectations (that is if you had any confidence in the performance they were reporting).
But by referring to "hedge funds" perjoratively we are doing most hedge funds a gross injustice. Now to be sure, the business model is a complete scam (2/20 with lock-ups), but the idea of taking a holistic investment approach has its merits. Of course, hedge fund investment strategies come in different shapes and sizes, and so it is an oversimplification (if not disingenuous) to refer to "hedge funds" as if they were all the same.
The hedge fund industry is like most other industries. The top 10%-20% of funds hold 80%+ market share. Most hedge funds that put their shingle out are small asset managers pursuing some specialized investment strategy. They use a little leverage here and there, but on the whole these are not organizations or strategies that can bang the market around. The real "hedge funds" are the major bank proprietary trading desks. When people refer to "hedge funds" euphemistically, this is who they really have in mind.
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