[palakchokshi]

You have to beware of overreaction to the bad investment. Generally folks are not savvy investors. Just look at the large number of small investors in the stock markets. When greed takes hold or FOMO does and lots of people lose money it will lead to an overreaction against investors wanting to put money in companies. This will lead to VC/angel investment drying up which in turn will curb startups.

Remember we live in a country where a cafe has to put the following disclaimer on Hot coffee paper cups "Caution: The contents of this cup could be hot!!"

[craigc]

Very very true. A lot of people make extremely poor decisions with their money. Perhaps there could be a threshold then? Like you are allowed to invest x% of your income/savings? I don’t really know the answer.

I think the cup example may actually be more to prevent restaurants/cafes from lawsuits vs. to actually protect their customers from burns. I suppose it could be a combination of the two though.

[palakchokshi]

The cup example was to show that people are dumb enough to sue a cafe because they got burned by hot coffee. It's an example of overreaction. Instead of thinking "I ordered a hot coffee, maybe this cup is going to be hot and I should be careful", people think "I ordered a hot coffee and because the cafe gave it to me in a cup I am going to assume it's the cafe's responsibility to make sure I don't get burnt" When people get burned they react by finding scapegoats.