January 29, 2007
If you were to tell investors that they would be discriminated against because of their gender or race or sexual preference, there would be an outcry. To put it simply: it is a matter of Choice. It is a matter of Equal Access. It is a matter of Equal Opportunity. Congress should change the rules and allow all investors to be truly equal, at least as to opportunity.
I believe it is time to change a system where 95% (and maybe soon to be almost 99%) of Americans are relegated to second-class status based solely on their income and wealth and not on their abilities. It is simply wrong to deny a person equal opportunity and access to what many feel are the best managers in the world, based upon old rules designed for a different time and different purpose. I hope that someday Congress will see to it that small investors are invited to sit at the table as equals with the rich.
Most hedge funds have an offshore version with lower minimums. The reality is that investors from Botswana have more and better investment choices than do average US citizens from Boston, Massachusetts.
If you ask the brokers and investment advisors on the front lines of serving the public whether they wish they had access to hedge funds on behalf of their clients during the difficult stock markets of 2000-2002, the answer would be a resounding yes. If you ask investors whether they should be able to make their own decisions - to have the same choices as the rich - the answer would also be yes.
The only people who benefit from limiting investor choice are those who have a vested interest in not facing the competition from hedge funds. As they seek to protect their turf, they have lost sight of the interests of those they should be serving.
Those who oppose allowing average investors to have the same choices as the rich should tell us why lower-net-worth investors are less intelligent or are deserving of fewer options than the rich. They should show why average investors should only be allowed funds which are one-way bets on an uncertain future.
I believe that investors would tell you that not allowing them the same choices as the rich is the type of government protection they do not need.