"Wednesday marked a historic milestone in the future of early stage investment and funding for innovation. Roughly 60 days from now, over 200 million Americans will have the option to be angel investors." LawGives.net March 27, 2015
Several Presidents have promoted home ownership despite no constitutional requirement. Most notable was Bill Clinton and we know how well that turned out. Now the SEC has changed the law to permit greater participation in equity crowd funding. Some estimate that 200 million Americans are now eligible to invest. The law was changed ostensibly to permit a larger number of investors to buy shares early in sexy pre-IPO companies like Google, Amazon and Facebook. Probably a popular populous idea. Again, there is no constitutional requirement for such investment rights.
The question I would ask is how many of my fellow Americans are financially literate enough to evaluate early stage companies. Based on returns, only about 10 percent of venture capitalists generate returns consistent with the risk and these are full-time professional investors. On a good day maybe 5 percent of Americans or 10 million of the 200 million are sufficiently literate financially to pick startups. Looks like we are following in the footsteps of Bill Clinton and about to start building toward a huge snafu again, promoting investments that were not prudent for the investors.
I don't object to permitting individual investment in early stage companies or crowd funding. I just do not believe it is the government's role to promote it. That's why I keep referencing the constitution. Looks to me that every time the government starts a populous investment program not required by the constitution, we have huge financial problems.
What could be the the crisis? My biggest concern is the huge amounts of money that normally go into the stock market or bank deposits could now be tied up in illiquid equity investments of uncertain value. Every investor has the right to make their own decisions. I just do not like the government promoting investments that are imprudent for many.