In this view, the potential for fraud plus most people’s inability to evaluate investments has three negative effects: (1) investors will suffer from losses that they cannot bear economically (think of the widow who loses her life savings in a risky venture); (2) because of the widespread losses that people will incur due to fraud and bad business ventures, over time people will become less willing to invest because of fear of such losses (i.e., a loss in confidence… [read post]