5 ms·

"The opportunity is risky to be sure, only for educated investors as ready and able to lose money as to make money." That's bullshit. We let poor people gamble

"The opportunity is risky to be sure, only for educated investors as ready and able to lose money as to make money." That's bullshit. We let poor people gamble and they aren't "ready and able" to lose anything. The laws around accredited investing are a disgusting example of how the 1% legally entitle themselves to opportunities while excluding the other 99%.

rday 12y ago
I don't think the gambling analogy works here. You can't invest 5 dollars in a company 1000 times until you have no money left. Also gambling odds are heavily controlled. Could you imagine a pit boss telling you "Table 5's die have an unfair advantage to land on 7"? Conversely, people raising money tell you exactly why they will succeed and why they are a better choice than some other company. These people can be very convincing as well. When gambling, bets are easy to understand. You make a static bet before the wheel spins. When investing, size of the pot depends on how well the company was valued when you made that bet. The next players may decide that the company was only worth half what you paid. This isn't something uneducated investors expect.
- themagician 12y ago
  That analogy isn't about odds. It's about the why. The reason we don't let 99% of people buy shares of private companies has NOTHING to do with protecting the wealth of the 99%. Nothing. Zero. And to pretend like people with less than a million dollars in liquid assets are "too dumb" or "inexperienced" to purchase something is beyond insulting. It has everything to do with creating a private market where the 1% can get in early before the price rises as public money flows in. Wouldn't want too many poor people to get in early. Wouldn't want to have to deal with a bidding war against poor people. Better off to just exclude them from the buying process when the price is low and then sell it to them later when everyone wants it. It's an institutionalized example of a law designed to maintain a plutocracy. It's disgusting. I never really understood just how stacked the cards were until I tried to buy FB shares on the secondary market one day. I wasn't allowed to. What the fuck? Then I got married and I became an accredited investor over night. I'm like, "Wow. Really? REALLY?!?! This is how it works?" Then I lost my status as the result of a divorce. So a few years ago I was smart and experienced enough to take on that risk. Now I'm not.
  - Domenic_S 12y ago
    > to pretend like people with less than a million dollars in liquid assets are "too dumb" or "inexperienced" to purchase something is beyond insulting. Really? Because a lot of that group said they "didn't know any better" and were "misled" when it came to bad mortgages during the crunch. Whether you believe them or not, that was their argument and it worked. There are entire industries based on exploiting people with bad money management skills (payday lenders, rent-to-own, etc). Clearly the population exists.
    - shanemhansen 12y ago
      But there's only one law "protecting" them from one specific kind of bad money decision. So I guess we're saying payday lenders are ok for poor people, rent-to-own is ok for poor people, but we must protect them from investing in the next amazon or dropbox at all costs. That's much riskier than the lottery.
    - a_c_s 12y ago
      1. Mortgage contracts are too complex for a layperson to understand. Often the amount of time people are given to sign them is less than it would take to read the entire contract through just once. 2. Getting a mortgage is an instance where the seller is also the advisor (similar to an auto mechanic or a doctor). 3. Consumers were actively advised to take out mortgages that the seller knew were more expensive than the consumer could afford. 4. If a predatory auto mechanic deliberately advised a customer they needed repairs that they did not, that would be fraud on the part of the mechanic. The same thing applies to predatory lenders. (There certainly were people who just made bad decisions. But there was also widespread, documented fraud on the part of lenders.)
      - prostoalex 12y ago
        Nobody really got screwed by misunderstanding small print on page 89 of the mortgage contract. The fraud (faking employment and income levels) was directed at insurers and buyers of those mortgages, not at the recipient.
    - 12y ago
- Spooky23 12y ago
  Gambling goes beyond table games. Pre-IPO startups are more like the propositions bet on at a sports book or racetrack. Actually, there are a lot of parallels between a startup and a racehorse. If you evaluate a horse's past performance, trainer, position in the field, etc you can bend the odds. It's still gambling!

rday 12y ago

I don't think the gambling analogy works here. You can't invest 5 dollars in a company 1000 times until you have no money left. Also gambling odds are heavily controlled. Could you imagine a pit boss telling you "Table 5's die have an unfair advantage to land on 7"? Conversely, people raising money tell you exactly why they will succeed and why they are a better choice than some other company. These people can be very convincing as well. When gambling, bets are easy to understand. You make a static bet before the wheel spins. When investing, size of the pot depends on how well the company was valued when you made that bet. The next players may decide that the company was only worth half what you paid. This isn't something uneducated investors expect.

themagician 12y ago
That analogy isn't about odds. It's about the why. The reason we don't let 99% of people buy shares of private companies has NOTHING to do with protecting the wealth of the 99%. Nothing. Zero. And to pretend like people with less than a million dollars in liquid assets are "too dumb" or "inexperienced" to purchase something is beyond insulting. It has everything to do with creating a private market where the 1% can get in early before the price rises as public money flows in. Wouldn't want too many poor people to get in early. Wouldn't want to have to deal with a bidding war against poor people. Better off to just exclude them from the buying process when the price is low and then sell it to them later when everyone wants it. It's an institutionalized example of a law designed to maintain a plutocracy. It's disgusting. I never really understood just how stacked the cards were until I tried to buy FB shares on the secondary market one day. I wasn't allowed to. What the fuck? Then I got married and I became an accredited investor over night. I'm like, "Wow. Really? REALLY?!?! This is how it works?" Then I lost my status as the result of a divorce. So a few years ago I was smart and experienced enough to take on that risk. Now I'm not.
- Domenic_S 12y ago
  > to pretend like people with less than a million dollars in liquid assets are "too dumb" or "inexperienced" to purchase something is beyond insulting. Really? Because a lot of that group said they "didn't know any better" and were "misled" when it came to bad mortgages during the crunch. Whether you believe them or not, that was their argument and it worked. There are entire industries based on exploiting people with bad money management skills (payday lenders, rent-to-own, etc). Clearly the population exists.
  - shanemhansen 12y ago
    But there's only one law "protecting" them from one specific kind of bad money decision. So I guess we're saying payday lenders are ok for poor people, rent-to-own is ok for poor people, but we must protect them from investing in the next amazon or dropbox at all costs. That's much riskier than the lottery.
  - a_c_s 12y ago
    1. Mortgage contracts are too complex for a layperson to understand. Often the amount of time people are given to sign them is less than it would take to read the entire contract through just once. 2. Getting a mortgage is an instance where the seller is also the advisor (similar to an auto mechanic or a doctor). 3. Consumers were actively advised to take out mortgages that the seller knew were more expensive than the consumer could afford. 4. If a predatory auto mechanic deliberately advised a customer they needed repairs that they did not, that would be fraud on the part of the mechanic. The same thing applies to predatory lenders. (There certainly were people who just made bad decisions. But there was also widespread, documented fraud on the part of lenders.)
    - prostoalex 12y ago
      Nobody really got screwed by misunderstanding small print on page 89 of the mortgage contract. The fraud (faking employment and income levels) was directed at insurers and buyers of those mortgages, not at the recipient.
  - 12y ago
Spooky23 12y ago
Gambling goes beyond table games. Pre-IPO startups are more like the propositions bet on at a sports book or racetrack. Actually, there are a lot of parallels between a startup and a racehorse. If you evaluate a horse's past performance, trainer, position in the field, etc you can bend the odds. It's still gambling!