Regarding the psychological impact of losses when you're handling investments for friends & family, this is much more common and institutionalized than just hedge funds. It is common practice for many large retail brokerage firms to deliberately take on many new brokers with the knowledge that the majority will wash out. They are then encouraged specifically to reach out to as many friends and family as they possibly can and bring the accounts to the firm. Then, even though that individual broker may wash out, many of the friends and family accounts will tend to remain with the firm. During the time the new broker is with the firm, they get caught up in the buzz and start to believe the hype that the firm's recommended lists represents the optimal investments for their friends & family. By virtue of their newly-minted Series 7, they think they know something about what makes a good investment or a good trade, even though that's not the purpose of a Series 7. You haven't seen how the major retailers play if you think the movie Boiler Room is only about little fly-by-night firms. One interesting question is which major player is the name JT Marlin supposed to represent. I know what firm name it almost sounds like, but there are other ways of playing with the name to see the name of at least one other firm.