Designer Erica Schoonmaker tweeted the other day,

I wish there was a shortcut to collapse all layer folders in Photoshop.

There is! Thanks to Jeff Tranberry, I can now point out the following*:

• Open/close all layer groups (folders) at the current level of hierarchy: Cmd-click the arrow next to the group
  • This is handy when you want to open/close, say, all the top-level groups without disturbing the open/closed state of any groups nested within them.
• Open/close all layer groups nested within the current one: Opt-click the arrow next to the group
  • This is nice when you want to open/shut a bunch of nested groups, without affecting any that lie outside the target group.
• Open/close all layer groups, period: Cmd-Opt-click the arrow next to a group

So, to keep things simple: when in doubt, Cmd-Opt-click a group’s arrow and you’ll collapse/expand all groups.

*On Windows please substitutes Ctrl for Cmd and Alt for Opt.