In the past week or so, a number of highly-respected investors -- including long-time bears -- have lined up to pronounce the recent stock market rally the real deal.

Now former Morgan Stanley Chief Global Strategist Barton Biggs, who currently manages hedge fund Traxis Partners -- appeared on CNBC's Fast Money to say that he too thinks the current rally will develop into a long-term bull run.

Hedge funds are a big shadowy world that has dominated the market. Since stocks have lost $30 trillion in value over the last year, much of that financial horsepower has been from hedge fund selling. But how much? And how much more? The answer to both questions is nobody knows because hedge funds are lightly regulated. But Barton Biggs has some ideas.

Biggs -- who runs a hedge fund -- estimates that the hedge fund industry will sell $250 billion more worth of stocks to meet investors demand for redemptions. He thinks that recently 7,000 hedge funds managed $1.9 trillion. But he guesses that the amount has declined to $1.4 trillion thanks to 25% worth of losses. He guesses that between $350 billion and $420 billion will be withdrawn by the middle of 2009 and that $150 billion has already gone. (He arrives at the $250 billion by subtracting the $150 billion from $420 billion and rounding up.)

Biggs is betting that stocks are bottoming out and that hedge funds will be eager to get back into the market so they can make up their losses and resume making profits which will get them back into a position to earn performance fees. He appears to be investing his money in the notion that all the bad news is already reflected in the market. Since he knows much more than the average person, he could be right. But I wouldn't bet on it.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Barton Biggs spent years as a top strategist at Morgan Stanley. But, several years ago, he left the firm to start his own hedge fund. In fact, he even wrote a book about his doings in the hedge fund world, Hedgehogging.

In his early 70s, Biggs certainly has seen the Wall Street manias. And, according to a speech he gave earlier this week at a Deal Flow Media conference, the latest spark is all about private equity.

His analysis is very simple. Firstly, there has been a huge inflow of capital into private equity funds. So far this year, the amount has reached about $178 billion.

Keep this in mind: a typical deal value is about 5X the equity. Thus, for the private equity raises this year, there is close to $1 trillion in purchasing power.

Now, this brings-up the next point: Are there enough good deals to put this money to work?

Obviously, Biggs doesn't think so. Basically, he thinks private equity will start doing bad deals.

After all, the fees on these transactions are lucrative for all players, such as investment banks, attorneys and so on.

Interestingly enough, back in the 1980s, there was a private equity bubble. That is, a ton of money came into the funds and bad deals got done. The pinnacle was the massive buyout of RJR Nabisco.

Wall Street has a short memory -- especially when there is lots of money being made. In the case of private equity, it does not seem to be a case of "if" but rather "when" a meltdown occurs.

Tom Taulli is the author of various books, including the Complete M&A Handbook. He operates InvestorOffering.com.