Bookstaber: All the broker-dealers would have a harder time. There is a joke that ran on Saturday Night Live where in the parody of the news they said: "Today on the New York Stock Exchange there was no trading. Everyone has what they want." If volatility is lower, there is less need to trade, so the broker-dealers will be hurt, and the hedge funds will be hurt because most of these guys are liquidity providers. They are there to provide liquidity to people when they need to trade. And there is not much reason to trade, so the spread is not there.

HEDGE FUNDS last year were complaining they were not doing well because there was not enough volatility. Now they are saying they like volatility, but not too much. —Nouriel Roubini

Roubini: Last year, hedge funds were complaining they were not doing well because there was not enough volatility. Now they are saying they like volatility, but not too much. It is an excuse for them not being that great. There has been a proliferation of below-average funds and managers.

Worth: Investors have put enormous sums into hedge funds and private equity. Are there enough talented fund managers to justify this?

Bookstaber: With all the different kinds of hedge funds out there, I think it’s a question of whether or not there are too many of them in any one area. There are, for example, only so many convertible bonds, and there are a lot of convertible arbitrage hedge funds chasing after them.

My feeling is that one area where the game is not going to be over any time soon is in equities, at least not in specialized areas. If you are in a specialized area, you are taking advantage of the fact that it’s a new market and other people aren’t quite up to speed yet. When they figure it out, your advantage is gone.

Glassman: I think you are going to see hedge funds making bigger bets on individual companies, including public companies. We all have theories on whether we can beat the market. If there is an individual who can beat the market, you are going to be far better off investing with that individual, even with the high fees.

Roubini: But 90 percent of hedge funds cannot beat the market. And in this world, it is becoming tougher, because the real alpha types are doing well, but they are the minority. And poor performers can always close their fund and start another. The performance records don’t reflect the ones that closed down.

Berman: I think we are going to be in an environment of fairly low returns and low volatility for a while, but I don’t think people have adjusted to a world of lower expected returns. Investors are going to look for that edge, which they will find in hedge funds or variations. For this reason, the trend toward alternative asset classes will continue.

I think insurance is going to be an important new instrument. Underwriting protections against hurricanes in the Gulf of Mexico, for example, is not correlated to the stock market, the currency market, interest rates, etc.