There are also, crudely, two types of investor. There's the investor with skin in the game, with personal capital at risk. This investor could be a typical private investor, or it could be a hedge fund manager or boutique asset manager. Their portfolio is managed like a personal portfolio because typically it is a personal portfolio, albeit perhaps supplemented by third party client capital. Then there's the professional investor, likely having very little or no skin in the game beyond maintaining a related salary (and, of course, in pursuit of a hefty bonus). This investor could be a trader at an investment bank or he or she, most likely he - let us call him Economic Agent Orange - could be a traditional fund manager. When you're essentially playing with other people's money, you have a greater propensity to "swing for the fences?. The pay-off is asymmetric. If you win, you win big. There's a reason why banks are so resistant to releasing information about bonus payments. If they were published in detail tomorrow, there'd be a revolution. But if you lose and lose big, you simply have to look for another job in the market, or perhaps you could try and do something more socially useful, like cleaning public toilets. That the second type of investor is now dominant in the market is a baleful development, because it is one of the factors behind the banking crisis to begin with. Give enough greedy people enough of other people's money to speculate with, and don't be surprised if accidents happen. Compare the fates of type 2 investors (we can call them, for want of a better phrase, banks) since 2007 with the fates of type 1 investors. As Hinde Capital point out, UK government support for Britain's banks amounts to £850 bn (plus £100 million for the cost of investment banking advice - what one might call an instance of super-cheeky rape of taxpayers). This figure breaks down into £280 bn in insurance cover for bank assets; £250 bn in guarantees of wholesale bank borrowing; a £200 bn indemnification of the Bank of England against losses for liquidity support; £76 bn in the purchase of RBS shares; and £40 bn in loans and funding to building societies and the financial compensation scheme. Oh yes, and now a loan of £7 bn or so to British banks that lent to Ireland. So on the one hand you have £857 bn in support for British banks. On the other hand you have the not one penny of taxpayers' money that has gone to, or been required by, hedge funds. That must be why continental Europe is so keen for (predominantly London-based) hedge funds to be more heavily regulated: because they're a clear threat to financial stability !

David Fuller's view I will quibble slightly with the comment on hedge funds. A small minority of them have done extremely well. Far more have been wound down due to underperformance, not least because of high fees, sometimes the leverage utilised, and an inability to provide an absolute return because they are closet index trackers.

Don't miss Tim Price's concluding paragraph on gold, and 'paper-bugs'.