[CryptoPunk]

Limiting direct investment to the very rich (accredited investors) is going to do massive damage to the investing public in the long run. You're denying the bulk of society the trials and tribulations it needs to evolve.

It's obvious to me that the negative unintended consequences of preemptively banning an entire class of economic exchange to the majority of people (unaccredited investors), and creating a centralized gatekeeper that gives exemptions on a case by case basis for projects that it approves, is going to be massive. That we see this so differently suggest we come from a very different set of personal experiences and perspectives on the world.

>>Not in cases where basic human greed is involved. People involved in MLM schemes, for example, are known to even f..k up their family for personal gain. Greed is powerful and highly corrosive.

That is not true. Human greed makes humans motivated to avoid bad investments as well. That's why the market adapts over time to be less gullible.

==I'm rate limited, so I'll respond to your comment below after this point==

>>There's a difference between investment (everyone can go via an online broker and trade with stocks) and dangerous speculations like IPOs or ICOs.

There's value in learning to spot promising new tokens, or in the case of IPOs, securities, as doing so is very lucrative. It's also beneficial for society for more people to become skilled in this activity, as it means faster technological evolution. Creating a class of investment lawyers and VCs who monopolize these sectors is not in society's interest.

>>and look where society is today, where people devise more and more elaborate fraud schemes and people are still believing it and sometimes invest their entire life savings into fraud, despite everyone and their dog blaring that they are investing in a fraud.

That doesn't show that the market doesn't learn. You're not demonstrating that the same proportion of people are falling for manias today as in 1636. You're only pointing out the obvious: that scams and irrationality still exist, and claiming this proves that no learning/adaptation happens.

To Sangermaine:

>>Nope. For the same reason that people still commit crimes despite knowing the consequences, greed for possible profit will always be the more powerful motivator.

If it were "always the more powerful motivator", then everyone would commit crime. You're falling for the pessimistic bias which inevitably leads to repressive societies. Over-reaction to crime is more dangerous than under-reaction.

[Sangermaine]

>That is not true. Human greed makes humans motivated to avoid bad investments as well.

Nope. For the same reason that people still commit crimes despite knowing the consequences, greed for possible profit will always be the more powerful motivator.

>That's why the market adapts over time to be less gullible.

No they don't, and never have. People just keep getting duped until rules and regulations are put into place. We have all of human history to show this.

You're simply expressing semi-religious beliefs about how things should work. We're concerned with how things demonstrably have worked and still work.

[mschuster91]

> Limiting direct investment to the very rich (accredited investors) is going to do massive damage to the investing public in the long run.

There's a difference between investment (everyone can go via an online broker and trade with stocks) and dangerous speculations like IPOs or ICOs.

> That's why the market adapts over time to be less gullible.

"The market", if such a thing exists, does not learn. For an example, look at the tulip mania - in 1636 - and look where society is today, where people devise more and more elaborate fraud schemes and people are still believing it and sometimes invest their entire life savings into fraud, despite everyone and their dog blaring that they are investing in a fraud.

[tinymollusk]

What's the evidence that learning/adaptation happens in a positive direction in markets? Without the directionality indicator, it sounds more like "this system has changed" rather than "this system has improved".

Also, the positive assertion that markets learn/adapt requires evidence more than the negative. The default assumption should be that the market changes randomly.

[CryptoPunk]

>>What's the evidence that learning/adaptation happens in a positive direction in markets?

The superior economic growth rates seen in countries with more economic freedom.

There's also the work done by Andrew Lo showing markets adapt and learn:

http://mitsloan.mit.edu/newsroom/articles/why-financial-mark...

>>Also, the positive assertion that markets learn/adapt requires evidence more than the negative. The default assumption should be that the market changes randomly.

I don't see the basis of assuming markets change randomly. Markets are composed of individuals who adapt and learn, and in a free market, theory would suggest people will adapt to configurations that tend to be mutually beneficial.

The market process of profit and loss also rewards better utilizers of capital with more capital, and less effective utilizers with less, so one would expect the market to evolve to become more effective at utilizing capital.

[tinymollusk]

My thought is that unless proved otherwise, the default assumption should not be "signal", it should be "noise".

There is little evidence that modern finance is a free market, or that (macro)-economic theory is all that good at making predictions.

Finally, this may be something we have to agree to disagree on. I look at financial markets and see too much irrational behavior and impossibly complex systems to make accurate predictions on. Without predictions we can test and verify, I don't place much faith in untested assertions, especially since the loudest voices tend to monetize giving advice like this.

Markets are predictable until they aren't. Economics has some interesting things to say about the behavior of people's rationality, but I have yet to be convinced that faith in the free market is anything more than seeing imaginary patterns in a complex system combined with survivorship bias.