But you can bet $20,000 on the single spin of the roulette wheel and the expected value is negative.
If you are allowed to do investing when young and at low levels, like many other things in life, you could learn some great lessons and maybe you won't sell your 1/2 million dollar IRA investments for 1/4 million in a market downturn.
Re:SEC Shuts Down Munchee ICO
by justrobert on Tuesday December 12, 2017 @12:56PM
(#15907767)
And yet anyone can buy 3x leveraged ETF/ETNs and not understand how the products are structured.
Some of those products, due to the structure, will always lose value over time as the futures used to replicate them are normally in contango.
So some financial products where they will always drift to zero are fine, but investments in companies that have a chance to profit aren't allowed.
You can create a company that has ludicrously limited opportunities to return its capital, and sell those to the public. You simply have to comply with the SEC's registration and disclosure rules --- in particular, you have to publish quarterly audited financials confirming your limited prospects.
That is the difference between the "3x leveraged ETF" and the "company that has a chance at profit" in your example, not some weird value judgement the SEC is making.
Who the hell in the "lower classes" is investing their money? Even a good share of middle class Americans have no investments at all or so few that their net worth is either negligible or negative. The idea that the SEC needs to be "protecting" these people when buying lottery tickets and cigarettes is legal is laughable.
False.
If anything, it exposes consistently larger "chunks of value" to the risk involved in the investment. Given accredited investors are used to evaluating risk it simply allows the to participate freely in the unknown risks of these types of investment vehicles without getting smaller investors involved in the mix. (It also prevents them from using their position against lower investment amounts made by lower accredited individuals.)
The "protection" afforded here is to the common investor, who by definition does not carry a large store of value with them. By preventing them from investing directly, by way of limiting their involvement based on their stored values, the SEC is protecting the "collective stored value" of the lower classes. And, this makes sense, given the dollar's value is based in part on what people are willing to pay for a given set of objects. This is the responsibility of the Fed to US.
An analogy would be the Yap allowing their children to go and mine Rai Stones by themselves. No sensible society would allow this to occur, given the dangers. And, yes, I'm comparing lower accredited investors to children, when considering the amount of knowledge they may carry with them regarding risk.