The Biggest Distressed Asset Opportunities of 2024

As we progress through 2024, the global financial landscape presents numerous opportunities for savvy investors, particularly in the realm of distressed assets. Distressed assets, which include real estate, bonds, and other financial instruments available at significant discounts due to financial instability or other crises, offer high-risk but potentially high-reward investment prospects. Here are some of the most promising distressed asset opportunities for 2024:

How Private Equity Reshaped America: A Deep Dive into Its Impact

In recent decades, the rise of private equity has dramatically transformed the economic landscape of the United States. From small businesses to iconic brands, the reach of private equity has extended far and wide, reshaping industries and leaving a lasting imprint on American capitalism. In this article, we explore how private equity consumed America and the profound implications of this trend.

Successful Angel Investments Have These Top Elements

Angel investing in startups is probably the most challenging form of investing there is. Having been involved with the Tech Coast Angels for the last 10 years I have seen 150+ companies funded and very few successes. One thing I have learned over that time is that about 90% of the investors in each company "didn't know what they didn't know". Why? Unless you are a full-time investor looking at business plans all day long or have some particular domain expertise, angel investing will turn into a charitable tax exercise for you. 

Successful angel investments usually had these top 10 elements going for them:

1. Investors had to earn their right to be part of the investor syndicate and invest
2. Investor syndicates typically had less than 5 investors investing $50K-$250K each
3. The investor syndicate only had domain experts in the deal
4. All investors contributed contacts, industry knowledge, or competitive intelligence
5. The investment was sourced through contacts and NOT blindly through random submissions
6. Sophisticated angels (like VCs) had looked at many other competitors from around the U.S.
7. The valuation was never an issue in negotiations and was understood by both parties
8. The market was in a recession and lacked institutional Venture Capital competition
9. The management team had worked on previous start-up successes and failures
10. The company had bootstrapped itself into a beta product and had to pay customers

Many angel investors may lack awareness or understanding of certain aspects of the investment landscape or specific industries. While it is true that angel investors, like any other group of individuals, may have knowledge gaps or areas of limited expertise, it's important to note that angel investors can bring valuable insights and experience to early-stage investments. Here are a few points to consider:

Diverse Backgrounds: Angel investors come from various professional backgrounds and industries. While they may not be experts in every domain, their diverse experiences can provide unique perspectives and insights. They often bring expertise from their own industries or successful entrepreneurial ventures, which can be valuable in evaluating startups.

Learning and Continuous Improvement: Angel investors, like any investor, should strive to continually learn and expand their knowledge base. Successful angel investors recognize the importance of staying informed about industry trends, market dynamics, and emerging technologies. They often engage in networking, attend industry events, and seek advice from mentors and experts to enhance their understanding.

Collaborative Approach: Angel investors often collaborate with other investors and industry experts during due diligence and investment decision-making processes. This collaboration allows them to leverage the collective knowledge and expertise of a group, mitigating individual knowledge gaps and increasing the chances of making informed investment decisions.

Subject Matter Experts: While angel investors may not be experts in every area, they often seek advice from professionals, mentors, or industry experts who possess specialized knowledge. They may bring on board advisors or consultants with expertise in specific industries or technologies to complement their own skills and enhance their investment decisions.

Learning from Failures and Successes: Angel investors gain insights through their past experiences, both successes and failures. By reflecting on their investment track record, they can learn valuable lessons and refine their investment strategies. This iterative learning process helps angel investors become more knowledgeable and informed over time.

It's important to recognize that while angel investors may not know everything, their participation in early-stage investments brings valuable financial resources, industry experience, and networks to startups. The key is for angel investors to be open to learning, seek expertise where needed, and engage in continuous improvement to make informed investment decisions. Similarly, entrepreneurs should actively seek out angel investors who align with their industry and domain expertise to receive the most value and support.

10 Ways President Obama Created Jobs

During his presidency, President Barack Obama implemented several initiatives and policies aimed at job creation and economic growth. Here are ten ways in which President Obama worked to create jobs:

S&P Low 666 (2009) x 2 = High 1332 (2012)

S&P Low in 2009 of 666 x 2 = 1332 High in 2012

The rigged stock market will undoubtedly become a key issue in the 2012 Presidential race.  The Obama administration will promote the fact that the stock market is up almost 100% since he took office in 2008.  Mitt Romney is going to attack the fact that the market is up 100% but so is the unemployment rate, which went from 5% to 10%.  Pick your poison.  The Federal Reserve's balance sheet is bloated and helped to rig the stock and bond market game.  How will it end in the next few years and what is the best path to long-term free market prosperity and organic economic growth in the U.S.?

The stock market has become a rigged game in the last few years.  It is being propped up by the Federal Reserve and Ben Bernanke's team by printing unlimited dollars to buy futures and bonds in the open market.  Bond prices are artificially low in order to encourage people to spend and not save.  However, the smart people running big corporations are sitting on hoards of cash earning 0%.  Its because the market has been propped up in a phony way and there is no organic growth.  Executives are expecting a stock market crash of grand proportions that will wipe out all of the Government businesses that have been propped up.  Cash will be king in the future and there will be no safe havens.  It's just a matter of time before the huge "House of Cards" bonds and stocks all fall at the same tim,e wiping out the wealth that has been artificially created.

Yes, the United States can print endless amounts of money in order to create inflation and promote growth.  The experts think we can grow our way out of the debt crisis and reduce the current 100% debt-to-GDP ratio that has doubled under the Obama administration.  However, the austerity in Europe is nothing compared to what we might see in the U.S. if Mitt Romney gets elected and the Federal Reserve money printing press is halted.  It will be painful in the short term but the long term gain for my kids and grandchildren will be tremendous.   The U.S. Government must feel the pain of overspending and let the free markets take over their bloated and egregious spending habits.   Don't forget Mitt Romney has been a private equity / restructuring guy in the private sector and will have the biggest turnaround project of all time on his hands once he pulls the Fed plug.

Mitt Romney knows that a healthy economy will grow through organic investment and capitalism at the local level.  In healthy economies, the Venture Capital & Private Equity industries thrive and so do quality IPO's that foster the cycle of wealth that has built the foundation of the United States.  However, the recent financial crisis has led the Government to step in and act as the market "Big Brother" to prevent big investors from losing money.  The VC industry and private equity industries are shrinking drastically because large LP's (limited partners) have no incentive to invest with below 0% annual returns due to overbearing Government regulations.  We all know in healthy free markets there are winners and losers.  However, now the losers are being prevented from losing and this is not capitalism.  Bailouts have been preventing huge bankruptcies and progress towards creating new and more efficient businesses.  

Thousands of banks should have gone out of business and so should have many of the auto companies like General Motors.  Restructuring and bankruptcies are all part of the free market cycle and we have yet to go through it on a large scale downturn.  The 2009 downturn was prevented by the Government by double its debt load in the trillions and now the next recession could be even worse and deeper.

In summary the only thing that is going to help the economy in the long run build a foundation of growth that is sustainable is if the Government simply gets out of the way.  We investors are all "Big Boys" and taking loses is part of the game.   Trying to impose regulations on the financial services industry to prevent loses only restricts the free market capital flows and prevents investors from doing anything.  We need investors to be excited about investing and now restricted.  These two bills / laws need to be repealed by the next President and then you will see healthy organic investment growth come back to the private sector.

1)  Repeal Sarbanes Oxley
2)  Repeal Dodd Frank Bill  

Should US Government Spending Crash Like the Stock Market?

Thanks to Marry Meeker for putting out this slide on her latest Awesome Web 2.0 presentation about the "State of the Web".  This slide struck me the most as a concern for investing in the future of technology.  Until the US Government cuts spending by 50% and gets out of the private sector way we are going to be in stagnant economy for a long time.  This slide is telling me a few things need to happen before our economy has even a chance of turning around.  In Wallstreet terms, I think we need the great capitulation of Government spending in order to right the private sector economy.   I will not get too excited about private sector investing until the following questions are answered . . .

1. Should US Government spending crash like the stock market? 
2. Will industries that rely on Government spending be crushed?
3. Has the Federal Reserve lost all credibility with the markets? 
4. The VC industry shrunk by 80% in the last decade so why not the Government? 
5. Rising interest rates might actually be good for the "real economy"?
6. Are currency wars are going to get even more intense? 
7. Is the US the new emerging market carrying highest investment risk?  
8. Where & when will the next tech industry boom (ie jobs) come from?
9. Is the Obama administration trying to kill capitalism vs government spending?
10. When will kicking the Government debt can down the road STOP? 

Should US Government Spending Crash Like the Stock Market?

In recent years, discussions around government spending in the United States have often been juxtaposed with the volatility seen in the stock market. The notion of a “crash” in government spending, akin to the dramatic drops experienced by stocks, has sparked considerable debate among economists, policymakers, and the public alike. But should government spending, a critical component of national economic stability and growth, be subject to such volatility?

The Nature of Government Spending

Government spending encompasses a wide range of activities, including public services, infrastructure development, defense, and social welfare programs. Unlike the stock market, where investments are traded with the hope of capital gains or losses based on market conditions, government spending is typically designed to support economic stability, promote growth, and address societal needs.

A “crash” in government spending could mean a sudden, drastic reduction in expenditure. Such a scenario could have profound implications, potentially leading to economic contraction, increased unemployment, and diminished public services. In contrast, the stock market's fluctuations, though significant, do not usually have the same broad, direct impact on the daily lives of citizens.

Economic Stability and Growth

One of the key roles of government spending is to act as an economic stabilizer. During economic downturns, increased government spending can help stimulate demand by funding infrastructure projects, providing unemployment benefits, and supporting businesses through subsidies or loans. This fiscal policy tool is crucial in mitigating the effects of recessions, making a sudden crash in spending counterproductive to maintaining economic stability.

In the stock market, investors often react to a variety of factors including corporate earnings, geopolitical events, and economic indicators. These reactions can lead to market volatility, which, while sometimes alarming, does not typically affect the broader economy in the same immediate and comprehensive manner as a sudden reduction in government spending might.

The Risks of Drastic Cuts

A crash in government spending could lead to several negative outcomes. First, it could undermine public confidence in economic stability. Consumers and businesses might cut back on spending, leading to a slowdown in economic activity. Second, critical services such as healthcare, education, and infrastructure development could suffer, exacerbating social inequalities and reducing quality of life for many citizens.

Moreover, a sudden reduction in spending could also impact the stock market negatively. Investors might fear that reduced government expenditure could lead to lower economic growth and profitability for businesses, potentially leading to a decline in stock prices. This interconnection underscores the importance of stable and predictable government spending policies.

The Balance Between Fiscal Responsibility and Economic Support

While the idea of a crash in government spending is concerning, it is also essential to consider the need for fiscal responsibility. Excessive government spending without corresponding economic growth can lead to unsustainable debt levels, potentially causing long-term economic challenges. Therefore, a balanced approach is necessary, where government spending is sufficient to support economic growth and stability, while also being mindful of long-term fiscal health.

Conclusion

In conclusion, while the stock market's volatility can be a source of short-term concern, the concept of a “crash” in government spending is fundamentally different and potentially far more damaging to the economy and society at large. Instead of aiming for a drastic reduction in spending, a more prudent approach would be to ensure that government expenditures are aligned with economic needs and fiscal sustainability. By striking a balance between stimulating growth and maintaining fiscal responsibility, the US can better navigate the complexities of economic management and ensure a stable and prosperous future for all its citizens.

Who is More Influential on the Economy Steve Jobs or Ben Benanke?

There is an argument to be made the Apple's $319 billion dollar market cap and its' publishing, advertising, software, retail and venture capital ecosystem of entrepreneurs and companies might be more influential on the economy than the Federal Reserve's interest rates controlled by Chariman Ben Bernanke.  Here are 10 reasons why:

1)  History has shown that the economy only grows when there is an ecosystem of technology that creates jobs & Apple has fueled the growth of tech which has created millions of jobs Worldwide.

2)  Ben's 0% interest rates have had no effect on whether millions of consumers Worldwide have made emotional Apple purchasing decisions.  Two thirds of the US economy is based on consumption and Apple is driving it.

3)  Ben Bernanke is an academic that relies on historical data to make reactive decisions when economic history rarely repeats itself.

4)  Steve Jobs relies on his vision to shape the future of the technology industry and millions of people are affected based on these decisions.

5)  The stock market always needs a leading growth stock story like AAPL in order for investors to get excited and put money to work in the market.  The Nasdaq 100 index QQQQ is 20% based on Apple and thus 99 other stocks are directly affected by how AAPL trades.

6)  0% interest rates over the last few years have done nothing but create a bond market and real estate bubble which does nothing for capitalism and growth.

7)  Steve Jobs has created wealth for millions of entrepreneurs who have started companies to feed off the Apple ecosystem.

8)  Ben Bernanke has put billions of dollars in the hands of bankers and bond fund managers to prop up the stock market and create a false sense.

9)  Foreign countries who invest in US Treasury Bills, like China, are not happy that the US is intensionally keeping interest rates low thus devaluing the dollar.  The Dollar cannot be devalued forever in order to finance the future and thus a long term bubble is forming if it were to rise suddenly.

10) Apple's stock (AAPL) has the largest market cap in the World at $319 Billion and if it were to lose value quickly it would take down a lot of hedge funds, pension funds who have jumped on the bandwagon of wealth creation and could be destruction if we are not careful.

Get well Steve!  We need you and Google to keep all entrepreneurs and investors excited about the future.  Technology NOT energy should be the basis of the World economy in order to leave a better place for our kids.

Ben Bernanke has Purchased Double D's

The Fed has spent most of the last two decades artificially inflating and deflating the stock market whenever they feel the economy needs a boost or is getting overheated. They know what they do has no direct effect on the economy but its a quick fix and doesn't provide any organic growth. Today, the only weapon the Fed has is the so-called wealth effect by driving the stock market up so people feel wealthier because interest rates are at 0%. The stock market went up 80% in 2009 so investors should be spending 2.4% extra of the entire value of the stock market, which is about two percent of GDP.  Here is a great video explaining the boom and bust cycles and is a warning to all entrepreneurs to stay current with stock and currency markets because it now directly affects you even if you are a small business. Maria Bartiromo sits down with Jeremy Grantham who has made some incredibly good predictions over the last few years.  Has the Fed lost control of the bond market?

The new $600B of quantitative easing goes into the banking and corporate sector of the economy who is largely sitting on the largest cash balance in business history.  They don't need the money at all and it's not the sector of the economy who is going to take our unemployment rate down from 10-15%.  Those who need the stimulus money the most, small business & private investors, can't get it. Seeing a company like General Motors go public again makes me want to puke.  I can think of 100 other companies who deserve to be public companies before GM and that creates far more future value, jobs and innovation in our economy.  GM going public is simply private equity, government money, and investment banker Ponzi scheme.

I was an apart of one of the largest business boom cycles in the late 1990s and there were a lot o great things about that time the US Government, FDIC, and Fed have forgotten.  Investors were pouring money into Venture Capital funds that were providing funding to companies who were providing real long term jobs and creating new markets of innovation.  Much of this money came from the Government in the form of FDIC subsidies and they made lots of money for taking this risk.  Once the bubble burst and hedge funds drove the market 80% lower there was no optimism or money left in the VC industry to spark new growth.  The VC industry has shrunk drastically in the last decade and almost 80% of the VC funds not based in Silicon Valley are virtually out of business (aka "the living dead funds").

Capitalism in general is kind of a Ponzi scheme but it can be done organically if the IPO market is fair and open.  Capitalism also works when Government regulatory agencies stay out of our way and don't favor big business monopolies.  I think if $100B in stimulus for struggling VC funds this would create another boom of optimism that we need.    The Fed and FDIC should also consider an Emergency Fund to fund to solve the overweight population epidemic that is slowing the US economy down.  Here are a few other ways President Obama could help create jobs.

Health & Wellness Venture Capital Funds

I heard an interesting investment thesis yesterday on CNBC that obesity is a major reason for our poor economy. The analyst said that fighting obesity with new health and wellness companies could add nearly $1 trillion dollars to our economy and create lots of jobs.  While at the same time taxing fat and food companies that are responsible for putting this in our diets.  Southern California would undoubtedly be the leading region of the US where outdoor activity and fitness are embedded in our everyday life.  When you travel East or to the Midwest, you begin to really notice how the Country has changed in the last 10 years.  Kids are fat and parents are lazy.  

Over the last 10 years, Venture Capital has become increasingly more specialized and VC funds have become much smaller. The idea fund size in my opinion is around $25-$100M in order to accommodate smaller funding rounds. Health and wellness companies have been criticized by almost every VC fund over the last decade because they are thrown into the category of lifestyle businesses. I think this could soon change if the US Government and Wall Street decide they want to take some companies public and a few private equity groups start looking to buy companies.

This is one reason I think the health and wellness category could emerge as a new investment category that could garner lots of FDIC or government subsidy money.  Are there any funds out there that have the thesis?  If there are I want to know about them because exercise is a passion of mine.   The types of companies a specialized fund would look for would be the following:

1) Running, triathlon, and race organization groups (Marathons, Ironman, 10K Races)
2) Health Food Manufacturing, Distribution & Marketing Companies
3) Exercise Equipment Manufacturing, Distribution & Marketing
4) Adventure & Health Travel Marketing and Organizations
5) Natural supplements and vitamin companies. No drugs allowed
6) Internet publishing - coaching, counseling, advice, therapy
7) Physical therapy, employee health, and chiropractic groups
8) A healthy diet and meal marketing & distribution
9) Software & mobile applications
10) Restaurants (maybe)

Southern California Ad Networks & Publishers

A stealth internet advertising/publishing renaissance is quietly happening in Southern California 10 years after the dot com bubble burst. Any investor who tells you it's hard to build management teams and big companies in Southern California is disconnected from the real markets. Southern California still lacks the big VC and Private Equity funds like Silicon Valley and Boston but entrepreneurs are scrappy here as you see by the list below. Most of these companies bootstrapped themselves and bypassed local SoCal VC firms raising larger rounds with Silicon Valley-based mega VC funds after achieving significant revenue growth.

These digital media companies will likely have between $10-250M in annual revenue in 2009 and are great M&A / IPO candidates. The combined list of companies has raised in aggregate of well over $1B of capital and employs 2000+ people in Southern California. These companies will ultimately spawn new entrepreneurs when liquidity is realized for shareholders. Soon Southern California just might have had a sustainable ecosystem of investors and entrepreneurs to compete with regions like Silicon Valley and Boston. This list is ranked in order of capital raised from investors. SoCalTech.com and Crunchbase.com were the sources of investment information.  

Demandmedia.com - 1333 Second Street, Suite 100 Santa Monica CA 90401 - Owns and operates 1) a network of 65 destination websites 2) a content and social media marketplace connecting content creators, users, and publishers on a mass scale, and 3) the second-largest domain name registrar. Most recently, Demand Media launched 

Livestrong.com in partnership with the Lance Armstrong Foundation.Total Funding: $355.00M Investors: 3i Ventures Generation Partners Goldman Sachs Lance Armstrong Foundation Oak Investment Partners Spectrum Equity Investors

Oversee.net - 515 South Flower Street, Suite 4400 Los Angeles CA 90017 - Operates an advertising network, services for parked domain name holders, and a series of consumer-focused websites. The company uses search engine optimization and other techniques to increase revenue from parked domains and other websites. Total Funding: $150M Investors: Oak Hill Capital Partners

Specificmedia.com 4 Park Plaza Ste. 1900 Irvine CA 92614  is developing technology that helps online advertisers target audiences through advanced behavioral, contextual, geographic and demographic technologies. 200M Monthly Total Funding: $110M Investors: Enterprise Partners, Francisco Partners, Shepherd Ventures

Hulu.com 2312 W. Olympic Blvd., Los Angeles, CA 90065 is currently the third-largest video provider on the web. The site focuses exclusively on professional content and does not take on YouTube directly as a viral video destination. Hulu videos are played in their own embeddable branded player. Content from at least a dozen TV networks and two major film studios is promised. Initial distribution partners include AOL, Comcast, MSN, MySpace and Yahoo. Total Funding $100M Investors: Providence Equity Partners, Disney, Fox.

Adconion.com1322 3rd Street Promenade, 2nd Level Santa Monica, CA 90401 Performance-driven online advertising and content syndication network. Investors: Index Ventures & Wellington Partners. Total Funding: $80M

Veoh.com 10180 Telesis Court Suite, San Diego, CA, 92121 is an Internet TV service that gives viewers the power to easily discover, watch, and personalize their online viewing experience. Total Funding: $69.8M Investors: Intel, Adobe, Shelter, Spark, Goldman Sachs, Time Warner

Reachlocal.com 21700 Oxnard Street, Suite 1600, Woodland Hills CA 91367 Brings order to the fragmented local Internet by connecting advertisers, publishers, and creative solutions providers together on one platform. Wherever customers are online, ReachLocal helps businesses find them with the broadest reach of local digital media, a dedicated force of local Internet Marketing Consultants, and technology that continually optimizes results. Total Funding: $67M Investors: VantagePoint Venture Partners, Rho Capital Ventures, Galleon Special Opportunities Partners, LP

Adknowledge.com 3003 Expositio 1st Floor Santa Monica CA, 90404, (Headquartered in Kansas City, Mo) Performance-based advertising network that utilizes powerful predictive technology to connect advertisers with consumers across multiple channels, including email, search, and social networks. Investors: Technology Crossover Ventures. Total Funding: $66.3M

Gorillanation.com 5140 W Goldleaf Circle Floor 3 Los Angeles CA 90056 An online ad sales rep firm represents over 500 leading web publishers and offers integrated media and promotional programs to Fortune 500 brand advertisers. Total Funding: $50M Investors: Great Hill Partners

Rubiconproject.com 1925 S. Bundy Drive Los Angeles CA 90025 - Yield Management Optimization platform, REVV for Publishers™, is engineered to accelerate revenue for premium Web publishers. Total Funding: $42M Investors: Clearstone Venture Partners, Mayfield Fund, IDG Ventures and GE/NBC Universal's Peacock Equity Fund

Openx.com Pasadena CA - Ad server for web publishers. OpenX offers a vast community of publishers comprehensive, customizable and free-to-use ad serving technology. The OpenX ad server empowers a community of more than 150,000 websites across the Internet with the ability to take control of their ads and maximize their ad revenue and relevance. The OpenX ad server products are translated into 25 languages, used in more than 100 countries around the world, and serve more than 300 billion ads each month.. Total Funding: $31M Investors: Accel Partners DAG Ventures First Round Capital Index Ventures Mangrove Capital Partners O'Reilly AlphaTech Ventures Miller, Jonathan

Break.com 311 North Robertson Dr. Beverly Hills CA 90211 - Break Media is the Internet’s premier entertainment community for men. Break Media consists of wholly-owned branded properties such as Break.com, Cage Potato, Chickipedia, Holy Taco, Wall Street Fighter, Screen Junkies and All Left Turns as well as a publisher network, the Break Media Network, that counts over 95 member sites. Total Funding: $21.4M Investors: Lions Gate Entertainment

Mahalo.com 902 Colorado Avenue Santa Monica CA 90401 - Human-powered search engine where results are generated non-algorithmically by a team of profile builders who create pages for search terms. Mahalo includes the most appropriate hand found links and information for about 10,000 unique queries. Total Funding: $21M Investors: Sequoia

Hydranetwork.com 8800 Wilshire Blvd, 2nd Floor Beverly Hills CA 90211 Performance-based ad network that distributes cost-per-acquisition (CPA) and cost-per-lead (CPL) campaigns through online affiliates. Named by Inc 500 as the fastest-growing advertising company in the U.S. in 2009. Total Funding: Unknown Investors: Unknown

Connexuscorp.com 2141 Rosecrans Avenue, Suite 2020 El Segundo CA 90245 Connexus is an online marketer and pay-for-performance ad network. Result of the merger of Vendare Media and Netblue. Investors: Insight Venture Partners & Oak Investment Partners Total Funding: Unknown

Silicon Valley vs The Gold Coast

The Civil War II has begun but this time it’s not the North versus the South. This Civil War II is about money under management in the financial services industry and it’s the West Coast (Venture Capital & Private Equity) versus the East Coast (Hedge Funds). Let me see if I can paint the picture for you . . .

The bulk of Hedge Fund investment comes from the East coast – principally Connecticut and New York City – which has become the leading location for hedge fund managers. In 1999 there were 500 hedge funds with roughly $500B under management. In 2008 were 12,000 hedge funds with nearly $2.5 Trillion under management. 500% growth!

The bulk of venture capital investment comes from the West coast - principally Silicon Valley. In 1999 there were 1000 VC firms which invested $100 Billion. In 2008 roughly 250 firms invested less than $25 Billion. That is a drop of 75%. Meanwhile Venture Capital accounted for 18% of the U.S. GDP in 2008.

Have you ever asked yourself why VC's or angel investors don't have the ability to sell short (hedge losses) against every private company investment in which 90% go out of business. If VC firms could hedge there would be no job or wealth creation by companies who actually add value to society. VC firms get paid to take risk and are rewarded by 10% of their companies making 10X+ returns. Everyone involved prospers for obvious reasons!

Hedge funds on the other hand profit from short selling and the destruction of capital or stock prices. These funds are primarily responsible for the bulk of the job losses and wealth destruction in the last 10 years and has driven the Stock Market to its' lowest level in 15 years. No one has benefited from this wealth destruction except a few fund billionaire fund managers and investors who I would put in the category of Maddoff even though their practices were legal (today).

Most of the Billions of dollars that have moved away from the Venture Capital sector in the last 10 years has moved across the coast (West to East) into the Hedge Fund investment category and look what it has done. I am very happy that the SEC is considering rules to regulate short selling practices and require funds to start disclosing short positions in companies. Hopefully, this will actually bring money back into the category of Venture Capital and help IPO prospects like Facebook and Twitter.

It is pretty scary when one trader with $12M can manipulate oil futures by $10. I am tired of hearing about traders on TV and want to go back the basics of investing. Futures are for businesses to hedge and not speculation. Stocks are for investing not trading. Some day my wish will come true if Obama stays strong.

West Coast = Venture Capital Funds, Wealth and Job Creation
East Coast = Hedge Funds, Destruction of Wealth and Jobs