The term hedge fund has taken on many different meanings, but the vehicle once used for managers who tried to "hedge" risk has become the vehicle of choice for every trader and investor who wants to manage money -- from one-man shops all the way up to the several-billion-dollar, multistrategy funds run by the brightest on Wall Street.

Because the term is so broad and loosely-defined, blowups in the hedge fund world add to the negative connotations already surrounding the word. After the Amaranth debacle, the words "hedge fund" immediately brought images of speculators and tremendous losses to the average American's mind.

Although the subprime implosion was considered an event waiting to happen by most logical economists and strategists who realized that good things don't go forever (yes, even in real estate), two hedge funds blew up several months back when the subprime market turned sour. But these weren't your average gunslinging hedge funds -- these were two hedge funds backed by one of the most prestigious mortgage-related Wall Street firms, Bear Stearns (NYSE: BSC).

Just today the AP is finally reporting the actual losses of these two funds and it's not pretty. The highly leveraged fund which had roughly $695 million in assets lost all of its money. The less leveraged fund, and therefore assumably less risky, only lost 91% of its $925 million asset base. According to the company's letter to the unsatisfied investors in these two funds, Bear said it is still in the process of winding down the funds' positions.

I feel like every time something like this happens I'm stuck asking the same questions - why don't these funds have risk controls in place? How can one market, which happened to be in a bubble, turning sour send two funds run by the "smartmoney" into the toilet?