Mr. Seides is probably one of the most highly regarded managers in the fund of funds space, and, for that reason, it's truly fascinating to see what a thin argument he musters in defense of hedge funds. Indeed, it actually gets weaker with each further comment, and provides an interesting window into the hedge fund community.

Most significantly, note how in every post his comments focus on just how smart, talented, and industrious his peers are; we don't see citations of studies, any analysis, or actual performance results, much less any refutation of the mountain of evidence compiled by Mr. Lack or other critics. When Mr. Case marshals substantive, detailed arguments to make his case, Mr. Seides, accuses him of not "diving in" to the details, and then fires back with what Seides himself calls "statistically insignificant data." Does he not see the irony here?

It may not be arrogance so much as the insular, self-referential world that many of these managers inhabit -- the extreme case being Mr. Paul Singer's recent comments about home inflation in Aspen and East Hampton proving that we nearing some sort of hyperinflation.

As Mr. Lack has pointed out many times, the hedge fund industry has retreated from earlier claims of absolute return, and then retreated from uncorrelated market returns, and finally is clinging to the idea that they won't lose as much money during a bad downturn as a passive index fund. That last argument is not standing up too well to recent evidence and studies, so the last refuge of the community is the assertion that they are the smartest and best compensated individuals in the public markets. With 98 percent of the profits from its industry retained as fees (as Mr. Lack has pointed out), it's clear that this last argument is good place to plant your flag, Mr. Seides. Yes, you and your peers are reaping millions. But investors should stay as far away as possible.