Why do retail investors have such a hard time making any real profit off investments? The problem stems from the current dynamic created by securities laws preferential treatment towards the “accredited investors”.
Historically, or at least in the last 30-40 years, most of the wealth that’s been accrued in our economy has ended up in the pockets of those people who can qualify as what’s called the accredited investor, many of whom are otherwise known as angels or venture capitalists.
Well who qualifies as an angel or a venture capitalist? Someone who’s “rich” or at least has a net worth valued over 1 million dollars. Basically someone who the government has deemed as having excess money and thus the financial flexibility to invest in risky ventures. That means the hard working, average income earning sap don’t get to ever have access to the same lucrative opportunities.
Not much of that copious wealth ever ends up in the pockets of ordinary Americans. Because of our securities laws, both at the federal and state level, and the excessive greed of these angels and venture capitalists, ordinary, decent, hard-working Americans get left out.
But ywy has this been allowed to happen? And, why is it still happening in a time when equality is being preached at every opportunity on every stage?
First, our securities laws are based on the notion that the ordinary American is either too stupid or too poor, or both, to let him or her take the kind of risk that the accredited investor is permitted to take.
How these angels and venture capitalists keep the companies that generate this wealth private for as long as they can and under their control, plays a big part as well. The current dynamic allows them to squeeze absolutely the last dollar of real value out of a start-up before dumping them on the general public in the form of an IPO, or initial public offering.
By the time the company’s stock winds up in our IRA or 401(k), all the real value has been sucked out. Retail investors are then left to deal with the residue as the company they’ve now invested in struggles to maintain its equilibrium (and its share price) in the marketplace. The result is that most of us never have a chance to get in on the “ground floor” of the next Facebook, Google or Amazon, yet we ultimately assume all of the risk of our investment tanking.
That’s why AOS is such a unique new way to approach investing and why the retail investor should be paying attention. Because if you ever wanted the opportunity to get your piece of that wealth, this is it.