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‘I feel like I’m in a financial prison’: Trump Wall Street plan puts ‘mom and pop’ investors at risk

rforno
edited February 17 in Other Investing
Long Guardian article on the pending torrent of 'alts' and PE being foisted on retail investors.

TL;DR: If you don't understand it, don't invest in it. Period. This is a timebomb just waiting to go off as Wall Street transfers the dodgy debt it can't get rid of anywhere else onto the shoulders of Joe and Jane Sixpack. And they'll get screwedm hard.

To wit:

< - >

The Deloitte Center for Financial Services has projected that retail investors’ allocations to private investments will grow from $80bn to $2.4tn by 2030.
< - >
Investor advocates worry this growing wave of smaller investors will enjoy fewer of the upsides – and more of the downsides – from alternative investments than sophisticated players.

“If you have a really good investment opportunity and need to raise money, you are probably not going to try to sell to every random truck driver,” said Benjamin Edwards, an associate dean at University of Nevada Las Vegas and expert on corporate governance and consumer protection. “So the firms that are offering these investments to retail investors probably can’t find anyone else to buy it.”

Along with the challenges of understanding complex investments, experts say, mom and pop investors usually don’t have the background to evaluate the firms and advisers that are peddling these deals.
< - >


https://www.theguardian.com/us-news/ng-interactive/2026/feb/17/trump-wall-street-plan-mom-and-pop-investors-risks

Comments

  • AnnaAnna
    Just another, albeit small, step in the rape of the working classes of the developed and developing world. Devolution continues without any means of abatement. Is evil peaking or are the things we are seeing just the beginning? Will my 77-year-old body soon be in a concentration camp from which it is drug out every day to work in the fields to feed the rentiers?;) Heil the American dream!

    😨

  • CrashCrash
    Hoo-boy! Do NOT touch that stuff. Remember what P.T. Barnum said. But sadly, there were enough voters who put the Orange Lump in the White House---TWICE. There's a BIG number of gullible people out there. Beware. Run away and be very afraid.
  • yogibearbullyogibearbull
    Another disturbing trend is that private-equity firms are buying insurers and reinsurers and stuffing their portfolios with lot of illiquid stuff. When will state insurance regulators wake up?

    X/Twitter LINK

    image
  • CrashCrash
    edited February 17
    I recall growing up and reading about the AUTOMATIC, routine way that skunk, Billy Bulger, granted the insurance companies their annual requested raise in premiums for consumers. That was a long time ago in Massachusetts, but are Insurance Commissioners today any better?
  • rforno
    edited February 17
    I still have a copy of the prospectus for the 'principal protected notes' that my (former) UBS guy was trying to flog on me back in 2007 as a 'safe' way to park my money for 2 years .... it was underwritten by (wait for it) Lehman Brothers. I keep it as a reminder to always do my due diligence.

    (My UBS guy was impressed, but kind of irked, that I was asking fairly detailed questions about this thing -- including if it was so awesome why was it being nicely-priced for retail investors, and asking for 'clarification' on various footnotes in the document, including counterparty risks, that I was learning about on-the-fly from CNBC back then.)

    Suffice it to say I didn't bite, and was much better off.

    This stuff is even more opaque and dodgy, I wouldn't touch it with YOUR money!
  • rforno
    Just for old times' sake...

    Bird and Fortune - Subprime Crisis (Sentiment, Volatility, Subprime, Hedge Fund Names)


    Bird & Fortune - Silly Money - Investment Bankers (Securitization, Subprime, CDO/CDS's)

  • hank
    edited February 17
    This brings back memories ...

    I bought a couple 1 oz gold coins from IGBE in the early 80s. A few month later I began getting letters offering me 20-25% interest on the value of the coins if I would mail them back to the company "for safe storage". Didn't bite. Eventually sold them to a local dealer.

    Brief excerpt: "When the company's offices were raided by law enforcement, it turned out that the gold bar stacks shown in their advertising were only wooden blocks painted a gold color."
  • hank
    edited February 17
    .
  • hank
    edited February 17
    .
  • WABACWABAC
    edited February 17
    yogibearbull said:

    Another disturbing trend is that private-equity firms are buying insurers and reinsurers and stuffing their portfolios with lot of illiquid stuff. When will state insurance regulators wake up?

    X/Twitter LINK

    image



    Well that's alarming. How do I find out if State Farm, our insurer, has been abused this way?

    We have been on the receiving end of two car accidents lately and have been very happy with how State Farm reimbursed us.
  • yogibearbullyogibearbull
    edited February 17
    @WABAC, that problem is with small insurers/reinsurers that are acquired by private-equity and then run in questionable ways.

    Big insurers' operations are more visible.

    State Farm is a huge mutual insurance company and is owned by "us" - I am a policyholder too as are you (-:). I won't worry about it.
    https://en.wikipedia.org/wiki/State_Farm
  • WABACWABAC
    Thanks yogi.
  • Sven
    edited February 17
    Here is a few insurance companies owned by private equity. Will post when I find more.

    https://msn.com/en-us/money/investment/5-insurance-companies-you-didn-t-know-were-owned-by-private-equity/ar-AA1TFbMJ

    Edits: .
    Geico, own by Berkshire Hawrthway, a public trade company.
    AAA, privately held not-for-profit national member association
    Farmer Group, a wholly owned subsidiary of Swiss-based Zurich Insurance Group
  • sma3
    Even the Wall Street Journal finds it nauseating

    https://www.wsj.com/politics/policy/trump-presidential-pardon-process-dda97c15

    The Guardian predicts a perfect storm. Loosening all the safeguards and even penalties for screwing mom and pop investors and if you cannot even avoid those weakened rules and get caught, Trump will pardon you like he did for Gentile, a Ponzi Schemer who spent less than a month of his years long sentence in jail
  • Old_JoeOld_Joe
    @Sven- thanks- was relieved to find that neither of our insurance carriers were on that list.
  • AnnaAnna
    Well, poo. I had a small 403b from my days in Texas. It was VALIC-AIG which went to Corebridge, one of the Sven five, a few years ago. A tad over 1% of my savings in a guaranteed 4% or more money market so I just let it be. They have handled my RMDs OK thus far.
  • WABACWABAC
    Might as well file this here.
    The Commodity Futures Trading Commission filed an amicus brief in federal court on Tuesday to assert the agency’s right to enforce prediction markets instead of individual states, according to its new chairman, Michael Selig.
    What's going on?
    “The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” he wrote.

    The move comes as prediction markets like Kalshi and Polymarket face legal challenges in multiple states over event contracts. The platforms allow users to bet on the outcomes of events in pop culture, sports, entertainment and more.

    Critics of prediction markets have argued that the offerings amount to little more than gambling, though Kalshi has defended its platform and argued that it abides by federal regulations. Sports betting on the prediction platforms has drawn comparisons to legalized sports betting in the U.S.
    snip\
    In his Monday op-ed, Selig said event contracts “serve legitimate economic functions” and operate under CFTC rules as “swaps” rather than gambling. He also posited that trading on event contracts is beneficial for the market and for Americans at large.

    “These exchanges aren’t the Wild West, as some critics claim, but self-regulatory organizations that are examined and supervised by experienced CFTC staff,” Selig wrote.
    I have to wonder how hard Selig was laughing as he wrote all that.

    Follow the money.
  • Old_JoeOld_Joe
    edited February 17
    Boy, ain't that the truth!

    But we should also appreciate the intended savings and efficiencies in the White House operations: If they can make as many of the scams and as much of the grift and graft legal, it will save an enormous amount of the "president"s time in granting pardons.

    On the other hand though, the diminution of the "presidential" income from the "pardons" grift may be a negative.
  • WABACWABAC
    There's always the ballroom and the library and now, the airport.
  • CrashCrash
    "...self-regulatory organizations..."
    LAUGHING here. Sure! Big Money has ALWAYS managed to successfully regulate its own, right? LOL.

    And Oceania has ALWAYS been at war with East Asia....
  • yogibearbullyogibearbull
    I have started a new thread on Prediction Markets so as not to take this thread (the OP was on private-equity/credit) more off-topic.
    https://www.mutualfundobserver.com/discuss/discussion/65641/prediction-markets
  • Level5
    “ignorance is strength”
    - G. Orwell 1984
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