On the otherhand, if Nikola was successful and retail investors couldn't get in early, it's an unfair advantage to the rich who are still allowed to invest.

Nikola is actually a poor example of your point. Their stock price is still up since they IPOed. A retail investor could sell their shares now and be fine.

It would seem we would gain a lot from greater transparency in who owns shares.

For example, Robintrack's data was very illuminating, almost every stock that made it to the week popular list was full of retail bagholders: https://imgur.com/a/LbvUOdi

Bet you thought I meant insiders. I'd run from stuff idiots buy!

> It would seem we would gain a lot from greater transparency in who owns shares.

Major KODK shareholders: https://finance.yahoo.com/quote/KODK/holders?p=KODK

Retail holds a small percent of pretty much anything, institutions dwarf retail.

Almost all of those institutions are holding shares on behalf of normal "retail" people, not professional investors. The statistic you are seeing is both in support of the claim of how much retail is a bagholder and in support of the claim that the word "institutional" is misunderstood.

They don't, SPACs up until recently had a very poor reputation, and it seems like we will soon have a new generation of investors learn the hard way why they had that reputation.

Every ten years a new generation of investors have to learn the same lessons

Seriously. I read "The intelligent investor" a few years back and it was striking how the original author was using examples from 1921 that read like they happened last week. For all the innovation in the rest of finance, investor psychology has really not changed that much.

Someone who honestly believes they can jump into the market and make it rich has to genuinely believe they are smarter than everyone else that came before them. It self selects for "This time it's different"

There's a reason why certain factors still have small biases in the market.

Had NKLA not been publicly traded, there would have been little financial incentive for an institution with skin in the game to systematically research and report on potential fraud.

The only way they are getting exposed is because they are public. There are countless Nikolas with vaporware getting hundreds of millions in VC funding, don't deceive yourself. Just look at how far WeWork was able to go until they had to go public, that public scrutiny is what eventually did them in.

On the other hand, our main fraud discovery mechanism is short selling. No public market means no shorts...

How did they get to the public markets in the first place? You'd think they got private funding?

Reverse IPO.

Meaning they merged with an existing "blank-check" public company.

Yeah but what entity did the reverse IPO? A private company? How was it funded?

VectoIQ (VTIQ), a public company, which did a somewhat normal IPO to raise funds. This is hardly some deeply guarded secret.

Further up someone says a private investor should have done due diligence. My point is before it went public, Nikola was private, and someone should have done the DD.

Due diligence can and should be done before investing in any company at any time, public or private. While any discovered fraud on the part of Nikola will be punished by the SEC and law enforcement, investors need to take personal responsibility for where they put their money (i.e. performing their own DD).

Discovering that Milton hired his brother whose previous experience was paving driveways, or that the chief engineer has no relevant prior experience isn't even deep DD. We shouldn't be playing the violins for retail investors on this one.

Conversely, we could treat retail investors like the adults they are.

Generally speaking, knee-jerk reaction to create rules and regulations for every problem in society will only lead to further dysfunction, less growth, and permanently locking the little guy out.