It was the outcome most commentators were expecting.

Even Roger Lawson of the UK Shareholders’ Association, which represented 150,000 small investors, admitted it was “not totally unexpected”.

But the defeat for hedge funds RAB Capital and SRM Global and other former shareholders claiming damages for the loss of their holdings in Northern Rock when it was nationalised last year is nevertheless a hard blow to bear.

The former shareholders may appeal, but a valuation of the equity at zero or close to zero is now looking entirely possible.

As if that wasn’t painful enough, Liberal Democrats economic spokesman Vince Cable, according to the BBC, said today that SRM and RAB “deserve to lose their shirts” and that “we should not reward such cynical and reckless speculation”.

Like many investors trying to catch the proverbial falling knife and pick up stocks on the cheap after the onset of the credit crisis, the Northern Rock situation turned out far worse than RAB or SRM expected.

At some point there will come a time when assets — be they equities, bonds, property or anything else — will present historic buying opportunities. But as many hedge funds have found out, being early can be far more painful than missing out on some of those tempting bargains.