How do hedge funds justify their sky-high fees? One reason individual investors might be persuaded to part with 2% of assets annually, plus 20% of profits, is that it's hard for them to hedge on their own. Shorting shares of stock is a risky business—the potential loss is unlimited— and terms are not too good (see "Shortchanged," Dec. 11, 2006). But salvation is at hand. New tools are cropping up to make bearish stock positions much more accessible to the retail customer. Result: You can create your own hedge fund, at low cost.
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