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0 pointsig112y ago0 comments

I still think it should be legal. After all you can take $10k and spend it at a Casino, there's no reason you shouldn't be able to gamble it on a company.

Although there are other reasons for investing other than financial returns, for example you believe in the mission of the company or you want to be a customer of the business.

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jonnathanson12y ago

I'm not arguing against its legality; I'm arguing that it's dangerous as written. It needs more enforcement of transparency on the side of the companies. The difference between gambling and "investing" of this sort is that at least gambling is 100% transparent. You know exactly what the odds are at the roulette table. And most people who gamble (barring those with addictions, of course) realize they're gambling; most of the new people who will "invest" probably won't believe they're gambling.

"Although there are other reasons for investing other than financial returns, for example you believe in the mission of the company or you want to be a customer of the business."

Sure, but that's what services like Kickstarter are for. Let's not kid ourselves into thinking that most Mom & Pop retail investors are going to be day-investing in small businesses out of high-minded principle. They're going to see dollar signs and dream of getting rich quickly. And there will be plenty of people ready and waiting to sell them those dreams.

Maybe it'll take a bubble or two to get people to realize the dangers involved, and eventually, it'll normalize into sort of what day trading has become. But there will be pain before then.

notahacker12y ago

Casinos are heavily restricted in how they're allowed to represent themselves though; in particular they usually can't masquerade as a good proposition for increasing your savings, or emphasise you'll earn so much more with them than at all the other casinos. I'd be all in favour of allowing public soliciting of investment which basically restricted it to statements along the lines of "if these hunches are right there's a small chance you'll end up with more money than you started with", which for most ventures relying on retail investors is basically the only pitch which is honest.

I'm in favour of people that believe in the mission or want to be a customer spending money on startups, but think the Kickstarter model of soliciting the funding without pretending it has a nontrivial possibility of financial returns already nailed that.