I tend to agree with you on this although of course the concept of 'hedging risk' through options, derivatives etc should not be frowned upon as such.

The issue I think is leverage and what happens if investors turn into a scary herd who wants to pull out all at once. I mean, the money is just not there :).

On the other hand hedge fund activity is specifically targeted at risks which other people don't want so the market forces clearly work too.

I am as I suggest in my post undecided. On a final note as Laurent also remarks ... the survey in the recent edition of the Economist is much worthwhile so off you go to the kiosk :).