Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant • Hacker News Board

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#91

Post by patentatt » Tue, Apr 03, 2018, 12:45 PM UTC

conanbatt wrote: post #77

s73v3r_ wrote: post #63

Earlier quoted context omitted.

So what happens when irresponsible investors plunge the country back into another great depression? How are you going to prevent the mistakes of others from causing a financial collapse which causes me to get laid off, through no fault of my own?

You overestimate the cost of speculative gambles, but let me ask a the opposite: if the regulation costs you your job and an economic recession who is going to compensate you for it? Because as far as i know the government has never given a check to compensate for its mistakes.

So much wrong with everything you said. First, the cost of speculative gambles is economic collapse. Such gambles were a root cause of the Great Depression. Second, how exactly is regulating investment going to cost anybody their job? Think it through. Maintaining the current state of regulation will have an effect now because ... ? It doesn’t make sense. Third, and this is by far the dumbest thing you said, of course the big bad gummint picks up the tab when people lose their jobs, it’s called unemployment! How fortunate you are to live with all of this evil regulation that you can be coddled into thinking that you know better than the generations that came before and put in place these institutions and norms. Libertarianism is a first world disease of entitlement that is only enabled by the stability and prosperity that effective government creates. It’d be so ironic so as to be funny if it weren’t so sad.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#92

Post by patentatt » Tue, Apr 03, 2018, 12:53 PM UTC

psyc wrote: post #82

JumpCrisscross wrote: post #12

Earlier quoted context omitted.

I used to be skeptical of accredited investor requirements [1] until cryptocurrencies happened. That an entire space can (a) go from zero to fraud in the blink of an eye and (b) not only ignore the delineation between gambles and core investments, but develop a collective disdain for it and anyone espousing it, has me convinced of the rule's wisdom. Investing in start-ups costs money. Diligence costs money, negotiati…

Often this argument isn't really about whether everyone is collectively 'better off' by some particular metric. It's about how much of a nanny state it takes to get that result, and whether that's contrary to the spirit of freedom of association. In other words, money is not the only value. Liberty itself is a value.

What of the liberty to not be swindled? The liberty to have access to public markets with an expectation that there is third party oversight of the companies you are investing in? The liberty to live in a society where hucksters are the exception rather than the norm?

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#93

Post by patentatt » Tue, Apr 03, 2018, 12:55 PM UTC

s73v3r_ wrote: post #62

nokcha wrote: post #49

Earlier quoted context omitted.

I think that the rich and the poor should have equal protection of the laws, as a matter of principle. Investor accreditation could be done on the basis of passing an exam (similar to how lawyers need to pass a bar exam in order to practice law) instead of on the basis of net wealth or annual income. >There is no person (a) who doesn't meet the accredited investor requirement and (b) for whom an illiquid, volatile se…

How much would you have invested, and how well would you have done had the start-ups went belly up?

Don’t know why this is being downvoted. The above comment makes it seem like early stage venture capital is an easy money spigot, and the only barrier to them getting rich is the big bad government.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#94

Post by patentatt » Tue, Apr 03, 2018, 12:56 PM UTC

wslh wrote: post #75

JumpCrisscross wrote: post #12

Earlier quoted context omitted.

I used to be skeptical of accredited investor requirements [1] until cryptocurrencies happened. That an entire space can (a) go from zero to fraud in the blink of an eye and (b) not only ignore the delineation between gambles and core investments, but develop a collective disdain for it and anyone espousing it, has me convinced of the rule's wisdom. Investing in start-ups costs money. Diligence costs money, negotiati…

I assume you are in favor of closing Las Vegas and prohibiting all those marketing campaigns that play with the brains and sentiment of billions of people. Many different kind of scams or tricks are present everyday. Also, there are zillions of entrepreneurs wasting their health and time following impossible dreams. I prefer losing money than my health. I am not endorsing any ICO but education should change to includ…

Not OP, but yes, I’d be in favor of all of the parade of horribles you trotted out

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#95

Post by patentatt » Tue, Apr 03, 2018, 1:00 PM UTC

maerF0x0 wrote: post #21

charlesdm wrote: post #15

Earlier quoted context omitted.

One simplified example: say people are investing in a passive property fund. Those funds generally yield around 3 to 5% per year. You're a smart entrepreneur. You build a huge skyscraper for $200m. You manage to generate a yield of 10% on that $200m. Most of the $200m is debt levered against the asset. The building subsequently gets sold to the fund on a yield basis. They'll pay $400m, i.e. $20m in yield p/a = 5%. Sm…

Smart entrepreneur had to take massive risks (albeit short term because of the sold yield) and do a ton of work over the timespan it takes to have that come to fruition. Yes, I understand the reward is also super high. I'm just trying to point out that for most people if they tried this they'd likely fail to pull it off(competence) or run out of runway(contingency).

Also, everyone can’t build a $200mm skyscraper, there are limits to how many of those we need.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#96

Post by lr4444lr » Tue, Apr 03, 2018, 1:01 PM UTC

smallnamespace wrote: post #85

lr4444lr wrote: post #66

Earlier quoted context omitted.

I think you're missing his point. Those very entities have agencies which are both "protecting" the public by imposing regulations that prevent them from expenditures with negative expected value, and at the same time peddle them. Imagine if there were a state-run cigarette producing public benefit corporations alongside public health departments. You'd have two agencies, one cultivating and the other discouraging th…

> Those very entities have agencies which are both "protecting" the public by imposing regulations that prevent them from expenditures with negative expected value, and at the same time peddle them. Those two things aren't necessarily in logical contradiction. There will always be demand for gambling and get-rich-quick schemes. Maybe it's better that the state monopolizes and regulates it (and makes it clear that thi…

This is a compelling argument, i.e., that regulated promotion is part of the long game toward protection against toxic behaviors. Probably the most notorious example would be supervised injection sites. The devil in the details is to what extent do you impose costs on the public majority that isn't afflicted with the problem, and accounting for all of the externalities, not just those produced by a commissioned "study". It's one thing to implement a progressive tax to claw back some of the advantages wealthy people reap from regulation. We can read those numbers on a balance sheet. Quite another to actually build the betting parlor or injection site, which invariably lands in the lower to middle class communities. Who's really paying the higher costs here in broad terms of value and quality of life impact?

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#97

Post by patentatt » Tue, Apr 03, 2018, 1:06 PM UTC

gibybo wrote: post #72

dmoy wrote: post #68

Say one has enough income or assets to be an accredited investor, but doesn't want to spend the time to figure out what private market investments are worthwhile. Do there exist any low fee broad market index funds for that?

EquityZen has an index fund of sorts, but the fees are high and it only includes companies that are on EquityZen which are probably not representative of the average. I'm not sure how much you need to join a round with a VC fund (and they would distribute that into a bunch of companies for you), but that might be your second best bet.

Lol, if you have enough to be an LP with a VC, they’ll find you ;-)

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#98

Post by conanbatt » Tue, Apr 03, 2018, 2:08 PM UTC

patentatt wrote: post #91

conanbatt wrote: post #77

Earlier quoted context omitted.

You overestimate the cost of speculative gambles, but let me ask a the opposite: if the regulation costs you your job and an economic recession who is going to compensate you for it? Because as far as i know the government has never given a check to compensate for its mistakes.

So much wrong with everything you said. First, the cost of speculative gambles is economic collapse. Such gambles were a root cause of the Great Depression. Second, how exactly is regulating investment going to cost anybody their job? Think it through. Maintaining the current state of regulation will have an effect now because ... ? It doesn’t make sense. Third, and this is by far the dumbest thing you said, of cours…

> First, the cost of speculative gambles is economic collapse. Such gambles were a root cause of the Great Depression

A man has earnt a nobel prize of economics by detailing how the federal reserve's money supply policy was the most noticeable trigger of the 1930's economic collapse. But even if you disagreed with that, speculation is definitely not what caused the great depression.

- The popular fear of engrossing and forestalling [types of speculative activity outlawed in England] may be compared to the popular terrors and suspicions of witchcraft. The unfortunate wretches accused of this latter crime were not more innocent of the misfortunes imputed to them than those who have been accused of the former -

> Second, how exactly is regulating investment going to cost anybody their job? Think it through

By restricting investment it lowers wage growth and employment. The rate of investment is maybe the best predictor of productivity increases and wage growth.

> Third, and this is by far the dumbest thing you said, of course the big bad gummint picks up the tab when people lose their jobs, it’s called unemployment!

Unemployment benefits are paid by the population, not by the government. Government is unable to compensate for its mistakes, because government owns nothing at all. Taxes are the ultimate ninja loan.

> How fortunate you are to live with all of this evil regulation that you can be coddled into thinking that you know better than the generations that came before and put in place these institutions and norms.

What is unfortunate is to disagree with it and still being obligated to follow it. If you find those kind of regulations upon the action of individuals beneficial, then the only thing you have to do is allow the Libertarians you so despise not follow them, and harm themselves. AFter that you will be able to enjoy your cautious riches and laugh at them, while not incurring any loss and having relative advantages.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#99

Post by nokcha » Tue, Apr 03, 2018, 2:47 PM UTC

s73v3r_ wrote: post #62

nokcha wrote: post #49

Earlier quoted context omitted.

I think that the rich and the poor should have equal protection of the laws, as a matter of principle. Investor accreditation could be done on the basis of passing an exam (similar to how lawyers need to pass a bar exam in order to practice law) instead of on the basis of net wealth or annual income. >There is no person (a) who doesn't meet the accredited investor requirement and (b) for whom an illiquid, volatile se…

How much would you have invested, and how well would you have done had the start-ups went belly up?

>How much would you have invested

Only what I could have afforded to lose. Around $5k. Not a lot of money (maybe even too small an amount to overcome the friction of traditional early-stage fundraising), but I would have gotten a much better RoI than my indexed stock-market fund got.

>and how well would you have done had the start-ups went belly up?

Well clearly I would have done poorly in that case. But that is why I don't invest more than I can afford to lose in risky investments.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#100

Post by s73v3r_ » Tue, Apr 03, 2018, 4:16 PM UTC

conanbatt wrote: post #77

s73v3r_ wrote: post #63

Earlier quoted context omitted.

So what happens when irresponsible investors plunge the country back into another great depression? How are you going to prevent the mistakes of others from causing a financial collapse which causes me to get laid off, through no fault of my own?

You overestimate the cost of speculative gambles, but let me ask a the opposite: if the regulation costs you your job and an economic recession who is going to compensate you for it? Because as far as i know the government has never given a check to compensate for its mistakes.

"You overestimate the cost of speculative gambles"

No, I remember my history.

"if the regulation costs you your job"

What regulation? The regulation saying that you can't screw people over? I wouldn't find myself in that job to start with.

"Because as far as i know the government has never given a check to compensate for its mistakes."

Not true in the least. Retraining programs to help people get into other industries have been all over. It's just the deficit hawk Republicans who tend to cut them.