5 ms·

> "it would be a fantastic outcome if the SEC decides to allow the general public to be a more active participant in the value creation that happens while compa

by roc 15y ago

> "it would be a fantastic outcome if the SEC decides to allow the general public to be a more active participant in the value creation that happens while companies are still privately held." That sounds like a complete disaster. The general public isn't nearly sophisticated enough to make wise investments without audited public statements [1]. That's exactly why we have such regulations in the first place. [1] And even then their capability is in question.

tomp 15y ago
Well, as long as the risks and dangers are known beforehand, I don't see a problem. I hate it when some "authority" tries to prevent me from doing something "for my own safety" - NO, instead, tell me what the risks are, and how can I prepare myself to deal with them, and then let me use my own intelligent mind to make the final decision. That's like saying, water is dangerous, lets require a swimming licence from anyone who wants to swim. Besides, your [1] in a way negates your claim - if the availability of public audited financial statements makes no change in the investment capacities of the general average public, then it surely makes no sense to base the permission to invest on that variable.
- roc 15y ago
  > "That's like saying, water is dangerous, lets require a swimming licence from anyone who wants to swim." The problem with your analogy is that a potential swimmer's total knowledge of the water, the difficulty of swimming and so forth isn't held by someone who materially benefits from their ignorance and could materially benefit from exploiting that ignorance. Caveat Emptor is a fine base-line. But practical experience has shown us that in certain sectors it's not sufficient. Snake oil salesmen can ruin a market by destroying the public's trust. So it is with investments. SEC rules are generally [1] built on the practical experience of how the market operated without them. We threw Glass-Steagal away -- an expensively won bit of knowledge about the shortcomings of the 'invisible hand' when it came to people gambling with others' money -- on the assumption that intelligent self-interested experts wouldn't do exactly what they -- almost to a person -- then did. I can't fathom being so eager to repeat that mistake while we're still knee-deep in its debris. [1] I won't dare use a universal; but I've yet to see a rule that wasn't created as a reaction to a problem in the market. That said, I'm far from an expert on the matter.
  - tomp 15y ago
    I think I see your point, and mostly agree with it. And I think you don't quite see my. (Of course, I might be mistaken, and it might actually be the other way around.) Consider this example: We have a nice beach. Part of this beach has huge waves, rocky, dangerous shore, and sharks. You, as the authority, have 2 options: 1) forbid swimming for everyone, and 2) warn about the dangers and let individuals decide. I can see how different people might choose different solutions, but I, don't like others telling me what to do, for my safety. Of course, if you just leave it like that, the public is going to loose confidence in that beach. But, if you put up warning signs, like "WARNING, very dangerous. Huge waves and sharks! 17 people have already died here this month alone!!!", which are probably going to deter anyone who isn't absolutely sure in what they are doing (or very drunk or very stupid), I don't see how the public might loose its trust. Especially if there is a very nice beach, perfectly safe, with a beach guard, quite near-by.
    - masterzora 15y ago
      The problem with this analogy is that it is generally pretty easy to look at the beach and gather the information that there are huge waves and a rocky, dangerous shore (and sometimes even the sharks) and then you are informed. If the only people who can inform you are the ones that are trying to draw money from you, though, it falls under something more similar to consumer protection than it does under closing beaches.
- jeffreymcmanus 15y ago
  The whole point is that the risks and dangers aren't known beforehand. One of the things that happens when a company prepares to go public is that its financial reporting must meet certain standards. That's how the risks and dangers become known. The phrase that describes this is "financial transparency".
- jasonwocky 15y ago
  >I hate it when some "authority" tries to prevent me from doing something "for my own safety" - NO, instead, tell me what the risks are, and how can I prepare myself to deal with them, and then let me use my own intelligent mind to make the final decision. My problem with this approach is that I predict that many who would join you in these decisions are going to lose out. However, you all still retain the right to vote in the future for forms of restitution to be made to you by the government. So Wall Street gets richer, some of you do well, and I'm at risk of helping support those of you who don't. Find a way to guarantee that I won't be your insurance policy, then I'll more fully support your right to take risks.
coryrc 15y ago
Or, it's a way to ensure that Wall Street gets a (large) cut of any investment made in a startup company by "normal" people. For example, let's take the words of Seymour Cray: The company raised $600,000 which was a huge amount of money in those days. It was done in a way that we can't do anymore. It was done on the street corner where people would stop by and say "Oh, what are you selling?" And you'd say "Oh, we're selling stock in a new company and its a dollar". And people bought a few dollars here and a few dollars there. There were no large investors in Control Data Corporation. I risked most of my assets. $5,000 dollars I invested which was a huge sum of money. It turned out to be a much bigger sum of money. It is interesting how our protective mechanisms over the years prevented such wild things from happening. Now it takes you six months to get approvals to do start any kind of an operation. http://americanhistory.si.edu/collections/comphist/cray.htm http://americanhistory.si.edu/collections/comphist/cray.htm
- wmf 15y ago
  For every CDC, I wonder how many scams were perpetrated at the same time.
  - coryrc 15y ago
    For every Facebook, I wonder how many startups failed at the same time. Oh, I guess the only people allowed to participate in high-ROI investments are the rich. We can't have little people competing! It might hurt their margins.
    - wmf 15y ago
      Maybe there's a way to balance the needs of savvy but non-rich investors and legions of suckers.

by roc 15y ago

tomp 15y ago

Well, as long as the risks and dangers are known beforehand, I don't see a problem. I hate it when some "authority" tries to prevent me from doing something "for my own safety" - NO, instead, tell me what the risks are, and how can I prepare myself to deal with them, and then let me use my own intelligent mind to make the final decision. That's like saying, water is dangerous, lets require a swimming licence from anyone who wants to swim. Besides, your [1] in a way negates your claim - if the availability of public audited financial statements makes no change in the investment capacities of the general average public, then it surely makes no sense to base the permission to invest on that variable.

roc 15y ago
> "That's like saying, water is dangerous, lets require a swimming licence from anyone who wants to swim." The problem with your analogy is that a potential swimmer's total knowledge of the water, the difficulty of swimming and so forth isn't held by someone who materially benefits from their ignorance and could materially benefit from exploiting that ignorance. Caveat Emptor is a fine base-line. But practical experience has shown us that in certain sectors it's not sufficient. Snake oil salesmen can ruin a market by destroying the public's trust. So it is with investments. SEC rules are generally [1] built on the practical experience of how the market operated without them. We threw Glass-Steagal away -- an expensively won bit of knowledge about the shortcomings of the 'invisible hand' when it came to people gambling with others' money -- on the assumption that intelligent self-interested experts wouldn't do exactly what they -- almost to a person -- then did. I can't fathom being so eager to repeat that mistake while we're still knee-deep in its debris. [1] I won't dare use a universal; but I've yet to see a rule that wasn't created as a reaction to a problem in the market. That said, I'm far from an expert on the matter.
- tomp 15y ago
  I think I see your point, and mostly agree with it. And I think you don't quite see my. (Of course, I might be mistaken, and it might actually be the other way around.) Consider this example: We have a nice beach. Part of this beach has huge waves, rocky, dangerous shore, and sharks. You, as the authority, have 2 options: 1) forbid swimming for everyone, and 2) warn about the dangers and let individuals decide. I can see how different people might choose different solutions, but I, don't like others telling me what to do, for my safety. Of course, if you just leave it like that, the public is going to loose confidence in that beach. But, if you put up warning signs, like "WARNING, very dangerous. Huge waves and sharks! 17 people have already died here this month alone!!!", which are probably going to deter anyone who isn't absolutely sure in what they are doing (or very drunk or very stupid), I don't see how the public might loose its trust. Especially if there is a very nice beach, perfectly safe, with a beach guard, quite near-by.
  - masterzora 15y ago
    The problem with this analogy is that it is generally pretty easy to look at the beach and gather the information that there are huge waves and a rocky, dangerous shore (and sometimes even the sharks) and then you are informed. If the only people who can inform you are the ones that are trying to draw money from you, though, it falls under something more similar to consumer protection than it does under closing beaches.
jeffreymcmanus 15y ago
The whole point is that the risks and dangers aren't known beforehand. One of the things that happens when a company prepares to go public is that its financial reporting must meet certain standards. That's how the risks and dangers become known. The phrase that describes this is "financial transparency".
jasonwocky 15y ago
>I hate it when some "authority" tries to prevent me from doing something "for my own safety" - NO, instead, tell me what the risks are, and how can I prepare myself to deal with them, and then let me use my own intelligent mind to make the final decision. My problem with this approach is that I predict that many who would join you in these decisions are going to lose out. However, you all still retain the right to vote in the future for forms of restitution to be made to you by the government. So Wall Street gets richer, some of you do well, and I'm at risk of helping support those of you who don't. Find a way to guarantee that I won't be your insurance policy, then I'll more fully support your right to take risks.

coryrc 15y ago

Or, it's a way to ensure that Wall Street gets a (large) cut of any investment made in a startup company by "normal" people. For example, let's take the words of Seymour Cray: The company raised $600,000 which was a huge amount of money in those days. It was done in a way that we can't do anymore. It was done on the street corner where people would stop by and say "Oh, what are you selling?" And you'd say "Oh, we're selling stock in a new company and its a dollar". And people bought a few dollars here and a few dollars there. There were no large investors in Control Data Corporation. I risked most of my assets. $5,000 dollars I invested which was a huge sum of money. It turned out to be a much bigger sum of money. It is interesting how our protective mechanisms over the years prevented such wild things from happening. Now it takes you six months to get approvals to do start any kind of an operation. http://americanhistory.si.edu/collections/comphist/cray.htm http://americanhistory.si.edu/collections/comphist/cray.htm

wmf 15y ago
For every CDC, I wonder how many scams were perpetrated at the same time.
- coryrc 15y ago
  For every Facebook, I wonder how many startups failed at the same time. Oh, I guess the only people allowed to participate in high-ROI investments are the rich. We can't have little people competing! It might hurt their margins.
  - wmf 15y ago
    Maybe there's a way to balance the needs of savvy but non-rich investors and legions of suckers.