Comments on: How to Invest in Facebook, Twitter and LinkedIn

By: Tammy

Tammy — Fri, 11 Feb 2011 20:34:20 +0000

By law are you supposed to prove your worth to invest in a company that requires accredited investors?

By: Financial Planning and Personal Investment Articles from Personal Finance Blogs | Personal Investment Management and Financial Planning Blog Directory

Tue, 27 Apr 2010 22:55:54 +0000

[...] presents How to Invest in Facebook, Twitter and LinkedIn posted at Darwin’s Finance, saying, “Ever wonder how to invest in Facebook, Twitter and [...]

By: Investor Junkie

Investor Junkie — Tue, 13 Apr 2010 12:16:38 +0000

@Financial Samurai,

We must tell Lotto winners this then. After all most who win wind up poor again anyways. They meet the criteria of accredited. I think a better method to become accredited would be via some written finance test, than purely via a salary or NW.

Bad Money Advice has a good point on the subject of high NW individuals:

http://badmoneyadvice.com/2009/05/millionaires-as-role-models.html

By: Financial Samurai

Financial Samurai — Tue, 13 Apr 2010 03:00:00 +0000

@Investor Junkie,
It’s easy. If I’m worth $2 million, and I make some idiot investment and lose 50%, I’m still worth $1 million, and am making over $200,000/yr so I can make it up.

If i’m some knucklehead who is delusional and is not accredited and lose 50%, well… I’m sh&t out of luck, and am gonna go become a liability to society.

By: Darwin

Darwin — Tue, 13 Apr 2010 02:20:48 +0000

@Investor Junkie, I partially agree in that it’s probably not a stretch to say that people that are worth millions and have been around the block, have advisers looking out for them etc. may have more experience and understanding of exotic instruments, but look at all the stuff routine retail investors got killed on (worse than hedge funds)! A simple S&P500 index lost 50% peak to trough, middle-class folks losing 6 figures on underwater mortgages (that many of them shouldn’t have been in in the first place) and Stanford CDs and other scams…

Conversely, I have plenty of friends who would fit into the accredited bucket that literally have no clue about investing and finance (no offense if you’re reading), but it’s just not something they’ve taken the time to understand. So, they come to me – and then I just give basic advice but don’t want to be responsible for giving them advice on something that didn’t work out…

All in all, if everyone had access to non-publicly traded shares, they’d be more expensive and more people would get burned while early investors sold shares (likely the “accredited”).

By: Investor Junkie

Investor Junkie — Tue, 13 Apr 2010 02:17:40 +0000

@Darwin,

I’m not completely against it, just the fact it’s speculative and you are investing in a black box.
As long as you understand this you’ll do fine.

Investing like this is similar to late VC funding, except you don’t have access to the same info a VC would.

By: Darwin

Darwin — Tue, 13 Apr 2010 02:15:24 +0000

@Money hints, Hmm, even for non-accredited investors? Do tell.

By: Darwin

Darwin — Tue, 13 Apr 2010 02:13:22 +0000

@Investor Junkie, I’d view an investment in one of these outfits as a purely speculative maneuver, but with huge potential. Recall before Google went public they weren’t making a ton of dough in the early days, and eBay was selling junk online.

While there may be an absence of near-term earnings to show for themselves, they don’t really care at the moment. They have all the funding and capital they want because VC/others see the potential. Additionally, if some firm ever bought them out, your stake would be worth 50% overnight. It’s not totally out of the question that a Twitter just says, “OK, I’ll sell out” and lets a desperate Microsoft acquire them or a trendy Google or Apple snatch them up. Depending on valuation, I’d gladly snatch a few shares.

By: Investor Junkie

Investor Junkie — Tue, 13 Apr 2010 02:10:17 +0000

@Financial Samurai,

Sam,

You know as well as I do you can still shoot yourself in the foot even if you are not accredited. So how does this protect the investor?

By: Financial Samurai

Financial Samurai — Tue, 13 Apr 2010 02:04:26 +0000

Being an accredited investor is VERY important imo. It protects the individual completely, b/c there are so many sub 200k a year donkeys who think they know about the stock market, or investing in whatever when they really have NO IDEA! Trust me on this one.

Everybody thinks they are a genius when the markets are going up. When the markets go down, they blame some exogenous variable.

Being a accredited investor also protects the company from donkey investors as well. It’s a win win, and good for the economy.

As for what I’m doing with my money, it’s my home base right here in SF… absolutely I’m invested in them.

Sam