With CNBC doing its Friday morning Squawk Box bits from the docks of Sag Harbor, with guest panelist wearing pink shirts and linen khakis, if it wasn't obvious by now it's clear that Wall Street has made a shift to summer hours. This is the time of the year when activity slows down, trading volume abates, and e-mails to key decision makers are immediately replied to with out of office messages. In many offices within the hedge fund industry this season, I suspect that the effects of the summer doldrums are especially pronounced. However, one bright light that may give reason to look forward to business post Labor Day is the news that aggregate year to date hedge fund performance is the greatest it has been since the late 1990s to the early 2000s, depending on who you're asking.

Not to be a complete contrarian or pessimist, but the fact of the matter is that this latest bounce has been largely a benefit to last year’s biggest losers and in most cases does not take them anywhere close to break even. As of July 17, 3323 funds reported their performance figures through June on the HFN database, and although 77% are positive so far this year, 44% were in double digit negative territory last year. To illuminate the extreme, there are 380 funds that have cleared 30% or greater this year thus far, and out of those 380 funds, 277 had 2008 losses in excess of 30% or more. Even if you were to scale back to a lower octane year-to-date return, you will see that this year seems to be more or less about offsetting some of last year’s losses. Of the 1,240 funds that reported through June and had year-to-date performance of 10% or greater, 705 of them had 10% losses or greater in 2008. As many of you can tell without the assistance of an Excel spreadsheet, these returns correlate a little to closely with market movement, and probably on the north side of .5. (The HFN Long/Short Equity average actually has an R Squared of .51 to the S&P going back to 1983 which is pertinent because they compose 27% of funds reporting for June and are a significant portion of most funds-of-funds portfolios.)

For argument’s sake let’s say that the S&P, which is up 1.78% through June, somehow doubles in the second half of the year and gets to 5%, which of course hardly puts a dent in last year’s roughly 40% drop. That scenario, which is a rather bold assumption to begin with, would be great at helping hedge funds recover, but then what about next year? What are the chances that the consumer, who is already debt laden, fearful of losing his or her job, and extremely cognizant of the frail economic environment, is going to pump the requisite amount of money into the economy to drive earnings? Can our government continue to take the place of the consumer through spending and stimulating the economy with money borrowed from China?

I think we have all heard repeatedly that investing in times like this will take a long term perspective, tenacity, and a great deal of patience. Perhaps the hedge fund industry will have to significantly moderate its get rich quick tendencies in order to one day recover and even come back stronger. Personally, I think that this summer would the best time to buy to buy a Rosetta Stone CD and start learning Mandarin.

The views expressed in this column do not necessarily reflect the views of Channel Capital Group. Inc.