What on earth are you talking about? There is no law that says accredited investors get more information about an ETF than other investors. This does not happen.
Paul will not be able to provide a credible source because what he wrote is completely and totally wrong.
iShares certainly has language in their website T+Cs which states that accredited investors can get access to information on the website which is not available to retail investors.
It is not ETF specific data. iShares offers some types of investments that are not available to non-accredited investors by law and offering information on performance of these investments would be a waste of time for both iShares and investors.
If ETF is offered to general public, its performance is available to general public, end of story.
I can say if you don't check the 'accredited investor' box you never get the reports, in fact you never even get a message saying you won't get the reports.
Where's the law that says they have to require that? If it is a legal requirement, how do they ensure that you are actually accredited, because if they sent you the info and you had lied surely they'd be breaking the law?
If you're not an accredited investor, you're not going to be allowed to invest in anything that they require accredited investor status to receive information about.
No intelligent investor could mistake an ETN for an ETF. They're wildly different products. One is a bond with a collection of complex derivatives attached. The other is a portfolio of stocks.
The mistake is made, but only by the dumbest of money.
> Take a look at this form to get monthly reports
So an ETN advisor offers some reports to accredited investors. This doesn't prove that there is a law demanding that certain info is kept from retail investors.
Anybody with a price feed could create those reports and use them as sales literature.
> Does your hat taste good?
Why would I be eating my hat? All you did was prove that you're financially and logically illterate. You also proved that you argue dishonestly, moving the goalposts when it becomes clear that your original post was 100% wrong.
Usually it's the other way around. By law normal investors have to be educated about all possible risks involved. Accredited investors don't need such information since they supposedly know those things already.
I liked the part where he says Kickstarter sucks because you donate your money to them without a stakeholder position or ownership in your investment of any kind. Its the reason Ive kept my money in my wallet and not thrown it around on kickstarter-projects, instead donated to FSF, EFF and Wikileaks among others.
Any takers to start up a kickstarter-clone without donation but part ownership? With pledges for more money to throw into project when it reaches a threshold and so on. Basically what we had 100 years ago with normal public stock traded companies but in a digital world.
My understanding is that doing this is complicated because selling securities which are not tradeable on open liquid markets to non-accredited individuals is frowned upon by the SEC (and similar entities in the EU). That's not to say that it's impossible to do: there's just a legal thicket to navigate & the legislators have teeth! (This might be why VCs have stayed away? They must have been pitched this idea over and over again in the last couple of years. Of course funding a competitor for your own revenue stream might not be something that your average VC is going to do either :) )
Kickstarter is fantastic for funding things which are ready to go but just need the capital to pay for volume manufacture up front. If the product isn't ready to ship in that form & their asking for funding to get it into that state then it's much more risky. I've funded things on kickstarter which were pretty much "I'd like to print this comic / book / whatever, if I can get a bunch of pre-orders in up front then everyone wins." Kickstarter is amazing for those kind of creator-driven projects.
He doesn't say that. He says "I have nothing against the kickstarter approach" but it's insane and it sucks that they're legally forbidden from giving you an ownership stake. way-to-keep-the-little-guy-down etc
I didn't follow them since then. Looks like they tried to crowd-fund themselves, but failed. However, he seemed very passionate about this idea. So, I would be surprised if they'd give it up easily.
Sounds a lot like WeFunder[1], which currently only allows accredited investors to take part, I believe, but because of the recent JOBS act will allow ordinary people to invest in the coming years.
I don't see why it's important that you become an owner. You are helping to fund what you believe is a worthwhile product.
When you buy an Android or iOS phone, for example, you are helping to fund a company. You don't get ownership for that company.
By funding individuals, or small groups, I believe that most are efficiently using the funds, and you are getting products that most larger companies couldn't be bothered with.
The problem is, you don't have any assurance of getting anything.
My condition for kickstarters is some kind of open sourcing clause, so that even if the creator fails, you are still assured of some kind of partially finished product.
I completely agree with you and the author. It's why I only support crowdfunding projects which aim to freely release their product upon completion. I'm happy to contribute to a bounty to release a new work into the public domain, but I'm certainly not going to provide free capital to a commercial entity which will retain all future profits for itself.
As the comment by 'pja' highlights, most of the restrictions to such an approach are legal.
The least restricted market in this regards is the United Kingdom where there are quite a few businesses in the crowdfunding/peer-to-peer lending space already - for equity funding see Seedrs[1] and Crowdcube[2].There's even instances of SMEs raising equity from the public directly e.g. Brewdog[3].
The UK regulator (FCA) is just catching up so things may change next year[4].
> And the answer is that rates would be lower than they would be in a maturity-transforming system. Maturity-transforming banking is redundant – it only gives us recurrent financial crises. The idea that in the absence of bank maturity transformation, lending rates would explode has been disproven.
First, serious writers don't need to bold their punch-line sentences so you know that they're punchline sentences.
Second, showing low P2P lending rates in a tiny market during a period when lending rates are generally in the toilet does not "disprove" the need for banks.
Indeed. In a tiny market, with low to non-existent legal and regulatory overhead. I know, let's make it a 'proper' market with legally enforceable terms and contractual relationships, leading to lots of legal and regulatory overhead. That's bound to fix the problem!
> I have nothing against the kickstarter approach. But it is insane to allow individuals to collectively donate millions to dollars to ventures without any ownership stake while at the same time barring them from funding the same projects and receiving an ownership stake in return.
In other words, "I have nothing against kickstarter, but it is insane to allow kickstarter to exist as it is". Contradiction alert!
> Almost all the criticisms of capitalism are derived from the pathologies of institutional fiduciary capitalism.
Having read on and discussed the topic extensively, I'd say that "almost all" is completely unjustified.
> However we can do better than allowing individuals to donate money on a hope and a prayer.
Odd seeing such a claim from a self-confessed supporter of capitalism.
> If we want capitalism to become less selfish, we need to enable each individual to become a capitalist.
Does he mean like owners of capital assets doing what they wish with it, as long as it doesn't infringe on the rights of others?
Exactly. The article is not saying it's insane to allow Kickstarter donations, it's insane that current law makes it just fine to donate to a risky venture but not to invest and get a chance to share in the venture's upside.
I wouldn't have interpreted it the way I did, had you written "I have nothing against the kickstarter approach. But when individuals are allowed to collectively donate millions to dollars to ventures without any ownership, it is insane to bar them from funding the same projects and receiving an ownership stake in return."
This retains most of your words, but what you find insane is less ambiguous now.
The two are utterly different. A donation necessarily means you no longer have the money, and will not be getting it back. Even a purchase generally means you wont get it back (that is, under normal conditions, I'm not going to get $100 selling a gadget I bought for $100). This sort of (non-)"risk" is understood by everyone, and there has never been an epidemic of people losing their retirements because they donated to a cause or purchased a gadget, even causes and gadgets that turn out to be outright scams.
An investment is not supposed to be a permanent and total loss of capital. On the contrary, the intent is to get more out than you put in. People depend on their investments for their financial futures. And there is a well-documented history of vast numbers of people losing everything to bad investments, especially investments pushed by scam artists from the small to the very large (like Madoff and Stanford).
Fair enough. I don't actually have a settled opinion on the matter. I was, however, pretty sure the author was being misrepresented as being against Kickstarter-style donations, and wanted to clarify.
on the "less selfish" nature of individual capitalism, I simply mean that our economic actions when we deal with our own money are often motivated by many considerations other than the purely economic. Kickstarter is an excellent example of this.
But when I act as a fiduciary responsible for investing someone else's money, I have to maximise economic return by law.
By allowing the masses to invest in small businesses, we obviously allow them to participate in the economic returns from these businesses. But we also allow them to express their more charitable altruistic goals within a well-developed framework where they can be more confident that their money is being put to good use. If nothing else, as an owner I am entitled to receive regular audited financial reports.
So, I invest/lend 100. The SME fails. Who is persecuting them? I don't want to chase each failed SME to get the money back.
I mean, you still need middle men. Nobody has willing, knowledge or time to rate, follow and persecute a bunch of SME's.
I would love laws and tools to lend to companies I know well although. Like companies of friends or friends of friends. But that is impossible now. Another big topic is discounting invoices, somebody here? Interesting topic with real hassle.
Banks are big because people's money is forced in by monetary supply inflation; it loses value when they actually save it.
Banks are crap because of regulation in a forced market: You basically have to put your money in a bank to counteract inflation, but becoming a bank is VERY difficult, so is competing with ones which will always be bailed out.
U.S. has the same issue with healthcare. Becoming a healthcare provider in the U.S. is incredibly difficult, even moreso becoming a healthcare insurer, and as such they consolidate and crapify as far as they can without making it bad enough to justify competing with them despite the regulatory barriers. Then all your drugs have to be FDA approved(which takes more than a decade at least), and many of them will be produced under one or more patents which also raise the cost of the medication.
42 comments
[ 3.4 ms ] story [ 107 ms ] threadThere are ETFs today that anybody can buy that will only give complete information to "accredited investors". That doesn't protect consumers.
Paul will not be able to provide a credible source because what he wrote is completely and totally wrong.
If I'm wrong I'll eat my hat, but I'm not wrong.
http://ca.ishares.com/misc/disclosure_pop.htm
Whether this is ETF specific data, I've no idea.
If ETF is offered to general public, its performance is available to general public, end of story.
http://www.velocityshares.com/monthly-reports-request
I can say if you don't check the 'accredited investor' box you never get the reports, in fact you never even get a message saying you won't get the reports.
Does your hat taste good?
No intelligent investor could mistake an ETN for an ETF. They're wildly different products. One is a bond with a collection of complex derivatives attached. The other is a portfolio of stocks.
The mistake is made, but only by the dumbest of money.
> Take a look at this form to get monthly reports
So an ETN advisor offers some reports to accredited investors. This doesn't prove that there is a law demanding that certain info is kept from retail investors.
Anybody with a price feed could create those reports and use them as sales literature.
> Does your hat taste good?
Why would I be eating my hat? All you did was prove that you're financially and logically illterate. You also proved that you argue dishonestly, moving the goalposts when it becomes clear that your original post was 100% wrong.
So no hat-eating for me, thanks.
Any takers to start up a kickstarter-clone without donation but part ownership? With pledges for more money to throw into project when it reaches a threshold and so on. Basically what we had 100 years ago with normal public stock traded companies but in a digital world.
Kickstarter is fantastic for funding things which are ready to go but just need the capital to pay for volume manufacture up front. If the product isn't ready to ship in that form & their asking for funding to get it into that state then it's much more risky. I've funded things on kickstarter which were pretty much "I'd like to print this comic / book / whatever, if I can get a bunch of pre-orders in up front then everyone wins." Kickstarter is amazing for those kind of creator-driven projects.
https://www.sprowd.com/
I didn't follow them since then. Looks like they tried to crowd-fund themselves, but failed. However, he seemed very passionate about this idea. So, I would be surprised if they'd give it up easily.
[1] http://wefunder.com/
When you buy an Android or iOS phone, for example, you are helping to fund a company. You don't get ownership for that company.
By funding individuals, or small groups, I believe that most are efficiently using the funds, and you are getting products that most larger companies couldn't be bothered with.
My condition for kickstarters is some kind of open sourcing clause, so that even if the creator fails, you are still assured of some kind of partially finished product.
The least restricted market in this regards is the United Kingdom where there are quite a few businesses in the crowdfunding/peer-to-peer lending space already - for equity funding see Seedrs[1] and Crowdcube[2].There's even instances of SMEs raising equity from the public directly e.g. Brewdog[3].
The UK regulator (FCA) is just catching up so things may change next year[4].
[1]: http://www.seedrs.com/ [2]: http://www.crowdcube.com/ [3]: http://www.brewdog.com/equityforpunks [4]: http://www.reuters.com/article/2013/10/03/britain-crowdfundi...?
First, serious writers don't need to bold their punch-line sentences so you know that they're punchline sentences.
Second, showing low P2P lending rates in a tiny market during a period when lending rates are generally in the toilet does not "disprove" the need for banks.
In other words, "I have nothing against kickstarter, but it is insane to allow kickstarter to exist as it is". Contradiction alert!
> Almost all the criticisms of capitalism are derived from the pathologies of institutional fiduciary capitalism.
Having read on and discussed the topic extensively, I'd say that "almost all" is completely unjustified.
> However we can do better than allowing individuals to donate money on a hope and a prayer.
Odd seeing such a claim from a self-confessed supporter of capitalism.
> If we want capitalism to become less selfish, we need to enable each individual to become a capitalist.
Does he mean like owners of capital assets doing what they wish with it, as long as it doesn't infringe on the rights of others?
This retains most of your words, but what you find insane is less ambiguous now.
An investment is not supposed to be a permanent and total loss of capital. On the contrary, the intent is to get more out than you put in. People depend on their investments for their financial futures. And there is a well-documented history of vast numbers of people losing everything to bad investments, especially investments pushed by scam artists from the small to the very large (like Madoff and Stanford).
But when I act as a fiduciary responsible for investing someone else's money, I have to maximise economic return by law.
By allowing the masses to invest in small businesses, we obviously allow them to participate in the economic returns from these businesses. But we also allow them to express their more charitable altruistic goals within a well-developed framework where they can be more confident that their money is being put to good use. If nothing else, as an owner I am entitled to receive regular audited financial reports.
No, you don't! That you say this just highlights how uninformed and unqualified you are to have written this article.
I mean, you still need middle men. Nobody has willing, knowledge or time to rate, follow and persecute a bunch of SME's.
I would love laws and tools to lend to companies I know well although. Like companies of friends or friends of friends. But that is impossible now. Another big topic is discounting invoices, somebody here? Interesting topic with real hassle.
You dont get to "persecute" anyone. Thats the risk of the investment
There must obviously be some sort of redress in the case of ouright fraud. But then, how do you distinguish malice from incompetence?
That's how the SEC got started...
Banks are crap because of regulation in a forced market: You basically have to put your money in a bank to counteract inflation, but becoming a bank is VERY difficult, so is competing with ones which will always be bailed out.
U.S. has the same issue with healthcare. Becoming a healthcare provider in the U.S. is incredibly difficult, even moreso becoming a healthcare insurer, and as such they consolidate and crapify as far as they can without making it bad enough to justify competing with them despite the regulatory barriers. Then all your drugs have to be FDA approved(which takes more than a decade at least), and many of them will be produced under one or more patents which also raise the cost of the medication.