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Comment by tuna-piano | Hacker News Reader

However, as long as someone isn’t betting their life savings on this I don’t see or take any issue with it.

...

Thai Gaon, a 23-year-old salesman in San Francisco, bought 35,000 Hertz shares on June 4 at $1.43, spending a little over $50,000, according to documents viewed by The Wall Street Journal.

“It was my entire life savings,” he said. “I decided, you know, if I’m gonna do it, I should do it big, and I’ll make a play and see what comes out of it.”

https://www.bloomberg.com/opinion/articles/2020-06-12/if-you...

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I don’t know why so many commenters here seem to want to prevent people like this from speculating/investing how they want. His risk tolerance is larger than yours and he’s arguably making a very stupid investment, so what?

Because the vast majority do not understand what they are getting into.

It's like having to wear a helmet when you ride a bike, you might say why does the government cares, it's my life after all.

But the problem with this logic is that if you fuck up hard enough you effectively become a liability for society. You'll hit the safety net and tax dollar will be spent helping you recover. And that's a good thing in my opinion, but because of this we can't just watch people going "YOLO" and putting themselves in extremely precarious situations and say nothing.

If the guy ends up on food stamps, society will pay for those. It's therefore in society's best interest to prevent this insane risk taking.

You don’t end up on food stamps by blowing your savings

You do if, say, you get laid off the following week due to a deadly pandemic.

Who decides what is risky enough to warrant that? Your example with bicycle helmets is a perfect example, helmet usage is not correlated with less bicycle accidents/injuries. The greater risk is that people choose a car just because they do not have a bicycle helmet, considering long term health should be a part of it.

That’s an impressive savings for a 23yo. Imagine all the work and discipline going into it. I wonder how much work and discipline he put into betting on Hertz.

And Hertz of all companies. My experiences with them have been uniformly awful; they always try to charge me for insurance or services which I explicitly decline, and their customer support is openly hostile. I'm sure they were a competent company at one point in time, but betting your life savings on a company that is apparently surviving on fraud is bold.

But all of that shitty behavior is actually good for the shareholders (in the short term) they were essentially seeing how much you could abuse captive and or ignorant customers.

Parts may have been gifted to him. If self earned yes impressive.

Pretty normal if you manage to save a lot and start working during highschool.

I hope he sold at june 8. He would have made some serious bank. But even if he sells today he will turn a profit

Sounds like he's been reading /r/wallstreetbets.

shrug And people jump off bridges. Doesn't mean we stop building bridges. The market is rough, them's the rules, sorry not sorry.

I mean, we make the rules with government. We can change the rules whenever we want.

Maybe a rule should exist for such edge cases to protect unsophisticated investors in a country not known for financial literacy?

Yeah, I tend to agree. This kind of deal with extreme and ridiculous risk is exactly what accredited investor rules are supposed to mitigate - but because Hertz is a public company they don't apply.

I’d agree accredited investor rules should apply for any public company fundraising while in bankruptcy.

You mean something like "accredited investor"?

> shrug And people jump off bridges. Doesn't mean we stop building bridges. The market is rough, them's the rules, sorry not sorry.

But it also doesn't mean we can't put barriers on those bridges that prevent people from jumping off. A rule preventing a company from selling stock when it's pursuing a bankruptcy would be just such a barrier.

https://en.wikipedia.org/wiki/Suicide_barrier

Risk is an integral part of the market. Why should people be prohibited from taking risks? I could probably get behind preventing people from taking extreme risks--those that would likely make them dependent on our social safety nets--but why prohibit people from putting a few bucks into a high risk investment (which is what you're doing if you prohibit the sale of stock in companies pursuing bankruptcy)? Even if you're 23 and betting your life savings, you still have an income and retirement account and a lot of working years left before retirement.

> Risk is an integral part of the market. Why should people be prohibited from taking risks?

Because some people are incompetent at judging risks, and offerings like these seem primarily designed to take advantage of those people.

You're just rephrasing the original argument, not rebutting my proposal. So I ask again: why prohibit everyone from taking reasonable risks when it's perfectly feasible to prohibit only high risk investments (i.e., those risks that would be financially ruinous i.e. put the investor on social support)?

> So I ask again: why prohibit everyone from taking reasonable risks when it's perfectly feasible to prohibit only high risk investments (i.e., those risks that would be financially ruinous i.e. put the investor on social support)?

1. These risks aren't reasonable.

2. It's practically simpler to ban this kind of weird and sketchy offering entirely than to implement some kind of control to limit the impact of what people can lose on a particular investment.

1. There's nothing unreasonable about someone investing their own money on whatever odds they want, provided the upside is proportional to the risk and if the investment goes badly it's not financially ruinous (where "financially ruinous" means "the person becomes a burden on welfare system" or similar).

2. It's marginally simpler but enormously restrictive. If I want to invest $100 for a potential thousand-fold payout, why can't I? I can legally spend more for worse odds (and a worse payout) on any number of institutions (casinos, lottery, etc). When you say "sketchy and weird" you just mean "a different risk profile".

> There's nothing unreasonable about someone investing their own money on whatever odds they want, provided the upside is proportional to the risk and if the investment goes badly it's not financially ruinous

Why stop there? Why not let Ponzi schemes operate unimpeded? After all, if you pull your money out of the scheme early enough, you could profit handsomely. Why not let people take that risk?

>> when it's perfectly feasible to prohibit only high risk investments (i.e., those risks that would be financially ruinous i.e. put the investor on social support)?

> It's marginally simpler but enormously restrictive.

All right: please submit a notarized accounting of your income and assets, so that the bureaucracy can evaluate it and decide if it's acceptable for you make this investment. We'll get back to you in 6-8 weeks with the decision.

> Why stop there? Why not let Ponzi schemes operate unimpeded? After all, if you pull your money out of the scheme early enough, you could profit handsomely. Why not let people take that risk?

To be clear, you think Ponzi schemes are illegal because they are too risky?

> All right: please submit a notarized accounting of your income and assets, so that the bureaucracy can evaluate it and decide if it's acceptable for you make this investment. We'll get back to you in 6-8 weeks with the decision.

I don’t understand the snark. That’s less involved than getting a permit to remodel your kitchen and the government already has information about your wealth anyway.

Anyway, I don’t understand your argument: “it’s too easy to make risky investments and if you make it harder it would be too hard so we should prohibit it altogether”

Because then we are implicitly responsible through social services for the idiots who gamble away their life savings with margin trading as an advanced form of gambling addiction. It's not just 24 yo doing it, it's also 55yo doing it with their life savings. I remember my previous landlord complaining about her ex-husband doing it decades after the fact and it's the reason why they split.

Requiring a pilot license level of education for margin trading & gambling past a certain point (like $1k) is making more and more sense as time goes on.

A local businessman in our area began day trading and options trading. Soon was fudging the books and lying to corporate about inventory. They soon came and locked up the joint, hauled him to jail and his family had to sell out to make up the losses. They'd owned a huge mansion and estate outside town - now its a development.

He was in his 60's, been a rock in the community and nth generation in the family business.

I'm not in favor of loosening the rules on who can trade risky investment.

I addressed all of this in my post already. This doesn't support the idea that we should prevent companies from selling stock when they're pursuing bankruptcy. It does support the idea that we should prevent people from taking risks that will likely land them on social support (which does not apply to the 23-year-old scenario above or even the 55-year-old scenario provided the couple had enough in retirement to keep them off of social services). Note also that none of this is incompatible with a licensure program.

Is it any worse than someone that never has the discipline to have any savings at all?

yeah but a 23 year old has a lot of life ahead of him. much different than a 70 year old doing that.

A 23 year old with 50K in savings is doing fine. That’s not even 1 years tuition at a top business school. And he’ll learn A ton when he loses it all.

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