Who benefits from markets tumblin'? Risk people.
On my first day working in New York (late September '08) I came back from lunch to see Hillary Clinton give a speech outside the fed.
Balancing on a chair in front of the world's press the Senator for New York was reassuring that the Fed knew what it was doing.
Meanwhile, colleagues who had spent their life in finance, were talking about getting into the farming game. Real assets. Corn and beef, that's where the future was at.
Before the crisis, risk had been licked, after it became a life buoy, and risk analysts became life buoys.
One of the laziest memes on the internet is that markets are zero sum games. Not true.
Booth says that his institutional counterparties are looking to make a quick buck on perishable informational edges; while his investor's long term horizon lets DFA provide liquidity to these larger institutions at a small premium.
Finding a niche group of counterparties to serve in this way can be very profitable.
An old colleague of mine used to recount how his fund would sell swaptions to Fannie and Freddie to help the CEOs smooth out interest rate risk and ensure they hit juicy bonuses at the end of the year.
Of course companies want to hedge out all sorts of market risks which unfairly impact their company's performance.
Many say that hedging takes up such a large proportion of the FX market's traded volume that it is less efficient and easier to make money in.
I.e. many participants are more interested in lowering their exchange rate risk than making money!
Like an Agatha Christie novel, everyone has their own motives, if you want to make money find a niche where most others don't.
But don't become a risk analyst - they are too pessimistic to ever make much money - and are only ever really happy in the middle of apocalyptic market crashes.