I disagree with this proposal for several reasons:
- The logic that wealth generation and principal residence appreciation enables more individuals to qualify who don’t appreciate the complexities and risks suggest that there should be similar rules to prevent people from purchasing principal residences and other substantial assets in the first place. Is the government going to prevent individuals from purchasing a home without passing similar litmus tests because of the sub-prime and related mortgage fall outs?
- Rules such as this only serve to break the link between risk and reward that is critical to the economic health of this nation.Investors and investment managers should understand this connection and it should be reinforced, not diminished. Unfortunately, some investors will lose. That is reality. It is unfortunate, but that is what is required to encourage people to take well-considered risks, which will keep the entrepreneurial spirit of this country alive and increase the prosperity of the many.
- Increasing the minimum net worth for investors doesn’t protect them. It only means that they have more to lose.
- The risks have hedge funds and private equity funds are well known—or should be by anyone who looks at the front page of a paper or internet screen. It is not the government’s job or responsibility to tell someone how to spend or invest his or her money—this only serves to lessen the responsibility one feels for his or her own future.
- “A fool and his money are easily parted.”
- “A fool and his money are lucky enough to get together in the first place.”—from Oliver Stone’s Wall Street
- There already are anti-fraud laws on the books.
Galileo Planning Group, Inc.
Financial & Investment Advisors
1550 El Camino Real, Suite 275
Menlo Park, California 94025