January 27, 2007
I disagree with the notion that only people with liquid assets above $2.5 million should be allowed to invest in hedge funds. There are many people sophisticated enough to understand the risks who do not meet the criterion, who have chosen to become teachers or social workers or something that doesn't pay well. If the SEC is worried about risks to the financial system created by sudden losses to masses of people who can't afford them, then limit contributions to hedge funds as a % of liquid net worth on a sliding scale such that limits disappeared after a certain point.