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The whole limit on how much you can invest looks silly to me. When it comes to investing in high growth startups, government thinks : "Poor people are dumb and

The whole limit on how much you can invest looks silly to me. When it comes to investing in high growth startups, government thinks : "Poor people are dumb and we need to protect them from their own mistakes". Where was this rule when greedy banks sold them expensive mortgages ?

pla3rhat3r 13y ago
I agree with this up to a point. I think there should be little that limits people from being able to invest as much as they want but then you have to consider the same limitations with IRAs and 401Ks. Not saying investing in a new startup is just like investing in an IRA or 401K but I can certainly understand it from that perspective. Maybe the answer isn't limiting the amount that can be invested but increasing oversight on the companies people are investing in. No one wants to be taken for a ride even though the risk is above average in this case.
7Figures2Commas 13y ago
> Where was this rule when greedy banks sold them expensive mortgages ? Uhm, the government encouraged much of the mortgage lending you're referring to. The loans themselves were artificially cheap. Unfortunately for borrowers, the houses were not.
- InclinedPlane 13y ago
  A lot of people thought those high risk mortgages were win/win. Best case scenario: the mortgage gets paid back at a healthy RoI. Better case scenario: the borrower defaults and the mortgage owners end up with real estate that is getting more valuable by the day. Of course, the borrower gets screwed but who gives a shit about them. And if the housing market tanks the whole thing falls apart, but the market can only go up, up, up!
  - 7Figures2Commas 13y ago
    Your understanding of how mortgage-backed securities work is flawed. MBS holders have no control over how the collateral backing their securities (the houses themselves) are dealt with in a default. The servicers of the MBS are responsible for this. In other words, no investor buys MBS with the expectation of owning houses because that's simply not what happens. Out of all the "victims" in the housing collapse, MBS investors were arguably some of the more sympathetic. They were the true bag holders, overpaying (in the form of lower yields than was justified by actual risk) for lead that credit ratings agencies assured them was gold. Following the collapse, many any of them sued, alleging amongst other things, fraud. On the list of "victims", many but certainly not all borrowers were less sympathetic characters. Some individuals had no problem lying about their income, and many others took out adjustable rate mortgages with the incorrect assumption that they'd be able to flip their homes at a profit or rent them out when their payments increased. It's hard to see these folks as anything other than willing participants in the game.

pla3rhat3r 13y ago

I agree with this up to a point. I think there should be little that limits people from being able to invest as much as they want but then you have to consider the same limitations with IRAs and 401Ks. Not saying investing in a new startup is just like investing in an IRA or 401K but I can certainly understand it from that perspective. Maybe the answer isn't limiting the amount that can be invested but increasing oversight on the companies people are investing in. No one wants to be taken for a ride even though the risk is above average in this case.

7Figures2Commas 13y ago

> Where was this rule when greedy banks sold them expensive mortgages ? Uhm, the government encouraged much of the mortgage lending you're referring to. The loans themselves were artificially cheap. Unfortunately for borrowers, the houses were not.

InclinedPlane 13y ago
A lot of people thought those high risk mortgages were win/win. Best case scenario: the mortgage gets paid back at a healthy RoI. Better case scenario: the borrower defaults and the mortgage owners end up with real estate that is getting more valuable by the day. Of course, the borrower gets screwed but who gives a shit about them. And if the housing market tanks the whole thing falls apart, but the market can only go up, up, up!
- 7Figures2Commas 13y ago
  Your understanding of how mortgage-backed securities work is flawed. MBS holders have no control over how the collateral backing their securities (the houses themselves) are dealt with in a default. The servicers of the MBS are responsible for this. In other words, no investor buys MBS with the expectation of owning houses because that's simply not what happens. Out of all the "victims" in the housing collapse, MBS investors were arguably some of the more sympathetic. They were the true bag holders, overpaying (in the form of lower yields than was justified by actual risk) for lead that credit ratings agencies assured them was gold. Following the collapse, many any of them sued, alleging amongst other things, fraud. On the list of "victims", many but certainly not all borrowers were less sympathetic characters. Some individuals had no problem lying about their income, and many others took out adjustable rate mortgages with the incorrect assumption that they'd be able to flip their homes at a profit or rent them out when their payments increased. It's hard to see these folks as anything other than willing participants in the game.