On the Street, the Tough Crowd Rules

By Amey Stone

BYE-BYE, LITTLE GUY. And it's not just hedge funds using these strategies. Brokerages and investment banks are increasingly making profits from their own proprietary desks, where traders act as in-house hedge-fund managers investing the firms' own capital. Even the more plain-vanilla mutual-fund industry is increasingly turning out funds that use hedge-fund-like techniques -- short-selling and layering on options -- to improve returns while reducing risk. At least that's the theory.

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All this is happening at the same time individual investors continue to take to the sidelines. At Charles Schwab, still the king of the discount brokerages despite a slump in its business, revenue from t