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Old 09-05-2013, 03:02 PM
 
Location: Los Angeles (Native)
25,304 posts, read 17,494,314 times
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Right now only accredited (code for Rich) investors are able to invest in startups. This looks like it will be changing with changes in the SEC rules. Do you agree with this article saying that it could change the gap between rich and poor in the U.S?

As an unaccredited investor I'd enjoy the idea of being able to invest in the 'next google or Apple' before the IPO. Of course you can lose money, but you can also make a fortune it if hits big.


"Why is it acceptable for the “unsophisticated” to invest in mutual funds and exchange-traded funds, typically through an unhealthy reliance on the advice of faceless financial professionals, but not in a local business they believe in and support? "


SEC Can Fix a Gap Between the Rich and the Rest - Bloomberg
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Old 09-05-2013, 03:50 PM
 
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Startup are private companies because their looking for sums of money. They are looking for people with money who can afford to let them runs with their ideas. Not small time investors with small investments that want to interfere to much.you can invest if you have the required sums needed.
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Old 09-05-2013, 04:07 PM
 
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The poor in general do not think strategically or far enough into the future to invest, let alone invest in startups. It would not be to their advantage to do so, anyway, because there is too much risk. They should, of course, be investing/saving, but until they can develop the mindset necessary to save or invest to build a critical mass of net worth or savings to provide financial stability, they cannot afford to take on the kind of risk investing in a startup would entail.
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Old 09-05-2013, 04:48 PM
 
Location: Winter nightime low 60,summer daytime high 85, sunny 300 days/year, no hablamos ingles aquí
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Quote:
I'd enjoy the idea of being able to invest in the 'next google or Apple' before the IPO. Of course you can lose money, but you can also make a fortune it if hits big.
Your odds of 'picking' a winning company are overwhelmingly against you. Venture capitalists are the Russian shock troops storming the German trenches during the the battle of Seelow Heights. The average lifespan of a Russian soldier was 20 minutes.
Or, to use modern saying as an illustration, "the fool and his money will soon go separate ways".
Predicting the next Microsoft or Google at an early stage is just as impossible as picking stock - numerous studies showed throwing darts at random will produce similar results.
The public however, thinks otherwise, bamboozled by the financial industry (aka Wall Street).
Hint: Wall Street make $$$ on transactions, not on the rising value of the stocks they trade.
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Old 09-05-2013, 05:35 PM
 
Location: Los Angeles (Native)
25,304 posts, read 17,494,314 times
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Yeah true it's not that easy to pick the next Google or Apple. But the point is that if you can invest early enough your returns can be amazing even if the company does not have an IPO. Yes you can lose it all, but it's not unheard of to make returns of 20x or more.

Peter Thiel invested $500,000 in facebook and made $1billion off that. So he made TWO THOUSAND times his money on that deal. One deal like that makes up for a lot of duds. It seems like the odds are a lot better to actual make some money versus placing the money in a mutual fund that MIGHT yield 10% a year or less..

If you were able to invest in facebook at that time, with $1000 you'd have $2million dollars.

Also someone mentioned that companies aren't looking for nonrich or poor people to invest in them.

Not sure if you've heard of Kickstarter...but many of those projects have raised lot's of money , small amounts at a time and that's not even offering the people 'donating' money a return on investment!

Another example is Obama's campaign that won him the election. He raised many millions over the internet , small amounts at a time $25 ,etc.
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Old 09-05-2013, 06:14 PM
 
Location: Winter nightime low 60,summer daytime high 85, sunny 300 days/year, no hablamos ingles aquí
700 posts, read 1,312,700 times
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Peter Thiel invested $500,000 in facebook and made $1billion off that. So he made TWO THOUSAND times his money on that deal
And by playing the lottery you can win $1000000 by 'investing' just a few bucks... there is only the small problem of picking the right numbers...

Last edited by skiffrace; 09-05-2013 at 06:27 PM..
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Old 09-05-2013, 08:59 PM
 
Location: Los Angeles (Native)
25,304 posts, read 17,494,314 times
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I really wouldn't compare it to playing the lottery . That's very exaggerated .
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Old 09-06-2013, 05:18 AM
 
Location: western East Roman Empire
8,061 posts, read 11,845,298 times
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Quote:
Originally Posted by jm1982 View Post
Right now only accredited (code for Rich) investors are able to invest in start-ups. This looks like it will be changing with changes in the SEC rules. Do you agree with this article saying that it could change the gap between rich and poor in the U.S?

As an unaccredited investor I'd enjoy the idea of being able to invest in the next "Google" or "Apple" before the IPO. Of course you can lose money, but you can also make a fortune it if hits big.


Why is it acceptable for the “unsophisticated” to invest in mutual funds and exchange-traded funds, typically through an unhealthy reliance on the advice of faceless financial professionals, but not in a local business they believe in and support?.
Nice idea, but, as others have mentioned, too risky for a small-time saver.

Right now the "poor" receive, or have received, subsidies in the form of food stamps, Medicare, unemployment insurance and, until a few years ago, subsidized loans to buy housing, as well as easy access to credit cards and student loans, and, coming soon, tax subsidies to buy health care insurance.

In my view, the worst of these has been subsidized loans to buy housing, saddling working class people with lifelong expense in the face of a stagnant jobs market due to the onset of global competition.

Much better would be to just give "poor" people a basket of dividend-paying stocks, with like a 10-year lock-up period, consisting of US blue-chip companies, starting with the energy and defense sectors, giving them a source of life-long income and hence a real stake in the lifeblood of the country, instead of saddling them with illusions, debt and expenses, giving them reason to curse it.

And don't argue that it would be like the government picking winners and losers: the energy and defense industries, along with banking and insurance, are the government.
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Old 09-06-2013, 02:19 PM
 
Location: Los Angeles (Native)
25,304 posts, read 17,494,314 times
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Perhaps I didn't make it clear. I wasn't thinking of poor uneducated people investing in these companies by 'throwing a dart on a board' so to speak.

The article did mention the gap between the rich and poor , and even the middle class in this country is "poor" compared to the rich.

I was thinking more of the educated person that has some money to invest, not a poor and uneducated person.

The whole point is that you don't need to already be rich to understanding investing or business.

These people already have to ability to invest in a number of things ,including penny stocks/OTC stocks many of which are super risky and practically scams.
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