There probably are too many hedge funds and actively managed mutual funds out there, because managers are overconfident (and paid to be) and because investors a

There probably are too many hedge funds and actively managed mutual funds out there, because managers are overconfident (and paid to be) and because investors are overconfident in their ability to pick funds. That said, there are markets much less liquid than the stock market. For example, when a company goes bankrupt, eventual partial recovery can take years. Hedge funds will buy claims from creditors at a discount. Those claims don't trade on an exchange. Much of the bond and real estate markets is not traded on an exchange.