It’s the Schwed Test: was your money stolenor did you just lose it?

The hurricane season has opened early in Florida, where a hedge fund has blown away, leaving some seriously rich investors seriously poorer. The $250 million question, so their attorney says, is whether the money was lost, stolen or strayed. The two Koreans who managed the fund seem to have left town, so it is no use asking them, but the money is unlikely to blow back again, and the attorney’s question was first raised by Fred Schwed in his Wall Street classic, Where Are the Customers’ Yachts? He put it this way: ‘Was it stolen or did you just lose it?’ The result might be the same, but investors have strong feelings: ‘The burnt customer certainly prefers to believe that he has been robbed than that he has been a fool on the advice of fools.’ Then he can have the satisfaction of shouting ‘Stop thief’ and calling for new laws and tighter regulations.