Modern hedge funds amplify risk despite a name meaning risk limitation

Evidence

The term hedge fund dates back to the 1940s, when it described a trading strategy that “hedged,” or limited, risk by betting against market fluctuations, using instruments such as short selling (betting that an asset will decline in value). The term has since been appropriated by speculators for whom leveraging risk (using borrowed capital to increase potential return), and lots of it, is the dominant strategy. In other words, hedge funds dramatically increase risk, rather than limiting or hedging it. — Andrew deWaard, Derivative Media, 142

Categorization

• DEFINE: Explains the etymological and historical gap between what hedge funds were named for (hedging risk) and what they actually do (leveraging risk).
• CANDY: Nice ironic cocktail fact: the thing called a hedge fund mostly does the opposite of hedging.