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I keep coming back to one thought watching this AI cycle unfold. Every dollar of generational wealth being created right now is happening in a market regular investors are legally barred from. SpaceX, Stripe, OpenAI, Anthropic, Databricks, xAI. The 100x and 1000x runs are happening before any of these touch a public exchange.
That’s not new. What’s new is the scale and the pretense.
The mechanics of an IPO aren’t a secret. Underwriting banks allocate to institutions and HNW clients of those same banks. Those are the people whose cost basis is measured in cents or low single digits. Retail buys the day-one pop, paying a premium that exists specifically because the pop provides exit liquidity for everyone who got allocated. You’re not investing early. You’re the bid that lets early money out.
Now the structural piece. Accredited investor thresholds: $1M net worth excluding primary residence, or $200K individual income. Those numbers haven’t been meaningfully updated since 1982. In nominal terms, easier to clear today than they were then. In real access, much harder, because the asset class behind that wall has been rebuilt. Companies that used to IPO at $1-5B and let public markets ride to $100B now stay private roughly a decade longer, IPO at $100B+, and the run from seed-stage to that public debut has already happened before retail can buy a share. The JOBS Act was sold as widening access. The actual effect was letting companies raise more in private rounds and stay private longer. The problem got worse, not better.
The “protection” framing is where it gets cute. Retail apparently can’t evaluate the risk of a sophisticated private placement. But we’re free to buy 0DTE SPX options that decay to zero in hours, lever 3x ETFs that volatility-decay themselves into the ground, pile into meme stocks at the top, get rugged on crypto launches with no recourse. The line between “needs protection” and “free to set money on fire” runs exactly along the boundary where the asset class produces compounding returns versus where it doesn’t. Convenient.
This week made it concrete. Anthropic on May 11 declared unauthorized secondary transfers of its stock “void,” meaning retail buyers who paid hundreds to over a thousand dollars per share through Forge, Hiive, SPVs, or tokenized wrappers may legally own nothing. People who reached and tried to participate creatively in a market they aren’t invited into got a clear answer about what their “ownership” actually was. I’m not singling out Anthropic. The rules let them do that. The rules are what I’m pointing at.
Behind the rules: the people writing them rotate through the firms that benefit from them. SEC to Goldman to BlackRock and back. Congress trading on information any of us would catch a wire fraud charge for. The regulatory regime is staffed by the beneficiaries.
This is also part of why crypto markets, for all their problems, became what they became. For roughly a decade they were the one venue where retail could be early. Not coincidentally, that’s where regulators concentrated their hostility. The cynical read is that the issue wasn’t really investor protection. It was the wrong people catching upside.
I don’t have a fix to offer. I don’t think there is one inside the current frame, because the people who would write the fix are the people it works for. What I notice is that “retail investor protection” has come to mean something close to the opposite of what it sounds like. The protection runs against the assets that compound. The freedom is to lose money in ways that don’t threaten anyone upstream.