The Video of Dumb Investment
South Korean retail investors, insider predicting, vesting cliffs, quant secrecy and crashing recruiting events.
A central problem for financial regulators is that people want to sell risky financial products to retail investors, and retail investors really want to buy them, but then later they regret it. Life would be pretty easy, for the regulators, if the retail investors all desired what was good for them, if they all wanted to prudently invest in low-cost diversified productive investments. Then the regulators could just prohibit selling spicier stuff to retail. “I’ve got an exchange-traded fund that provides three times the daily performance—,” some company would say, and the regulator would say “nope!” and move on. “I want sell private-company—,” nope! “I want to offer an emerging asset class of bets on football—,” nope! “Doge—,” nope! Go ahead and sell that stuff to, you know, hedge funds with at least $1 billion of assets. But for retail investors, nope.
The problem is that a lot of retail investors really do like some fun in their investments, and get angry if the regulator paternalistically tells them what they can and can’t invest in. “Why do hedge funds get to buy all the fun stuff, while I am stuck with index funds,” they ask.