On the Q3 earnings conference call for Fortress Investment Group LLC (NYSE: FIG) -- a top alternative investment firm -- there was an interesting discussion of the recent volatility in the financial markets. For example, between 2003 to 2007, the S&P 500 only had two days where the markets moved 4% in a day. However, in October of this year, there were 20 of 23 days where the S&P had intraday moves of greater than 4% (one day had a 10% move).

As a result, it's no surprise that the Q3 results for Fortress were lackluster. The firm reported a loss of $20 million, or $0.04 per share, which compares to a profit of $111 million, or $0.26 per share in the same period a year ago.

In fact, Fortress hedge funds have been hemorrhaging. That is, investors have requested $4.5 billion in redemptions, which accounts for about a quarter of assets. Unfortunately, it looks like there will be more redemptions over the next couple quarters.

As for the private equity funds, things are much better. After all, there are long-term lock-ups on such vehicles. No doubt, these assets will be a rich source of ongoing management fees. And, when markets come back, there are likely to be incentive fees.

In light of the wrenching markets, it's likely to be a long slog. And this is not comforting for investors. Keep in mind that Fortress carries $675 million in debt, which could be in jeopardy of a covenant violation -- because of deteriorating cash flows.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.