Laws are great when they do stuff like keep us safe and protect our personal property. But as with sun exposure or Milk Duds, too much of a good thing can end up being…not so good.
Take, for instance, the law in Grand Haven, Michigan that makes it illegal to throw an abandoned hoop skirt into the street—what’s that about? We’re all about preventing littering, but what did hoop skirts in particular ever do to anybody, other than make them look fabulous?
Anyway, it’s no secret that some laws are just plain broken. Hi, immigration. Do we even know what the laws are? So what do legislators tend to do when faced with a broken law? That’s right: they fix it by making another law. Sometimes this works out, and sometimes it doesn’t. But when we get a big old pile of laws stacked on top of each other in an effort to fix problems with their previous iterations, we call it “legislative overkill,” and it tends to get a big thumbs-down from those in the business community.
Regulation in general, while sometimes very necessary, tends to hit businesses in the pocketbook. Think about it: more regulations = more fees, more red tape, more forms to fill out, more reporting requirements, more restrictions, etc. It gets expensive. And complicated. And time-consuming. So when we have layer upon layer of laws and regulations, many investors and business owners claim that lawmakers are trying to legislate their business to death. RIP LLC.
Related or Semi-related Video
Finance: What is risk?4 Views
finance a la shmoop. what is risk? it's a game! this one remember Parker Brothers
roll the dice move your armies take Kamchatka own the world! okay so that's a [risk board game pictured]
slightly different variant than investing risk. but think about the
notion of risk and reward being married to each other in a we fight every
Thanksgiving and question why we were ever married in the first place kind of
way. buy a US government bond and the odds it doesn't fully pay as promised are
about equal to the odds of our being nuked. typically investors trade-off
between risk and reward if you take high risk you want high reward, or at least
the potential of it. it would be kind of stupid to take high risk for no reward
right? well the US government pays its bills hi Greece we're looking at you. but
a bond only gets you a few percent a year return these days. had you bought
call options on Amazon when it was 500 bucks a share with those call options at
$700 expiring four months later, well you'd have taken massive risk but at the [chart showing growth of amazon stock going up]
end of those four months had you timed things right
you'd have made like 20 times your money. how do you timed it just one month early
or late well you'd have lost everything. investing in the stock market generally
carries two flavors of risk. there's market risk ie the risk that the whole
market goes down and you lose money that way, and then there's intrinsic or
individual stock risk. ie the market just trundles along but you pick a bad stock
and it goes down while the market is flat or goes up. got it ?market risk .the
whole world blows up and your nest egg gets taken down with it. intrinsic risk.
it's only you who sucks. you put all your eggs in a basket with a bad handle and
well now there are a lot of chickens that ain't going to happen. [eggs in basket]
Up Next
What are systematic and unsystematic risk? Take a risk on this video and hit play.
What is an Entrepreneur? An entrepreneur is just a person who starts and owns his or her own business. As an entrepreneur, every step in starting a...