Besides, chances are good that you don't know as much about running a business as the entrepreneur (and any venture capitalist or "angel" investor partners). You're riding along on their efforts, and you deserve a return for that -- but you can't expect to receive nearly as much as the entrepreneur who started the dream or the pre-IPO investors who gave their time and business savvy as well as money to the company's success.

There is a class of what're called "accredited" investors. They are the people who get first crack at investing in private placements, in start-up companies. By law, they must have a net worth of at least $1 million or have received at least $200,000 in net income in the past 2 years and be on track to receive that this year. The Securities and Exchange Commission assumes that people who meet this requirement are big boys and girls who know how to separate good from bad investments, and can lend experience and

Until a short time ago, I thought the above advice was obvious. Then I read AMERICAN SUCKER by David Denby and RULE BREAKERS, RULE MAKERS by The Motley Fool, and encountered the (to me) weird notion of investing like an entrepreneur.

David Denby is a well-known movie reviewer who jumped into the high tech, dotcom boom very late in the party, with predictable results -- he lost a million dollars.

One of the stocks he didn't want to sell was ImClone, which you may recognize as the biotech stock which Martha Stewart sold a little bit too soon. Denby knew the president, Sam Waskal, and was impressed by the entire romantic dream of Waskal taking a discovery he'd made in the laboratory and using it to build a company, hoping that the FDA would eventually improve his cancer drug. When Denby writes about holding onto ImClone, he explains how this made him feel connected to the entrepreneurial American dream, which he sympathizes with because his parents were businesspeople, though he himself is a journalist.

In RULE BREAKERS, RULE MAKERS The Motley Fool advise you to invest like an entrepreneur when looking for the rule breaking stocks that can eventually make you rich. That is, take risks. Don't play it safe. Live out the American dream of helping to launch a business. Then they go on to expand on this theme by telling readers to invest like a venture capitalist, and mention the man who helped launch Netscape's record-breaking IPO, which was the real start of the dotcom boom (and later bust).

Now, I'm all in favor of the American dream of financial independence and starting your own business and so on. If you have an idea for a product or service which will benefit the world -- great, hop to it!

But what's that go to do with investing? Yes, when you invest in a small company that may fail at any time, you are helping that company to survive the competition. You are in a sense helping to continue the American dream.

But don't confuse that with placing your money into buying stocks in the secondary market.

Yes, the purpose of the stock market in our capitalistic culture is to provide a way for entrepreneurs to raise the money they need to make their new companies survive and thrive.

But the entire purpose of the secondary market is to make sure that early investors in a company will be able to later sell their shares and make a big profit on them. It's to guarantee the existence of liquidity. The New York Stock Exchange, the NASDAQ -- all exist solely so that early investors can dump the stocks they bought when the company was brand new.

Buying stock in the secondary market is just not the same as starting a new business. There is certainly some degree of risk, but there's one huge difference.

The entrepreneur owns the dream.

Whether it's hamburgers or coffee or fizzy colas, the dream begins with the entrepreneur. The entrepreneur frequently puts their entire future on the line, and when they succeed they're rewarded accordingly.

If the FDA had approved ImClone's drug for additional trials, David Denby's shares of ImClone would have risen in price, but Sam Waskal would have become wealthy.

Venture capitalists don't own the dream of a new company, but if they believe that the new company is a potential success, they'll back it with their money.

Yet there's one small detail about venture capitalists that The Motley Fool forgot to mention, one small difference between James Doerr and ordinary investors such as you and I . . .

Venture capitalists don't just hand over their money, and then sit back wishing and hoping the entrepreneur will be successful -- they demand a large degree of control. They don't own the dream of the new company, but they seize control of its direction. They tell the entrepreneurs what to do to survive and become successful. They generally have more business experience than the entrepreneur, and will twists as many arms as necessary to guarantee the success of the business (and their far-from-passive investment).

You can't do that with Microsoft just because you own a few hundred, a few thousand or even a few hundred thousand shares.

Besides, chances are good that you don't know as much about running a business as the entrepreneur (and any venture capitalist or "angel" investor partners). You're riding along on their efforts, and you deserve a return for that -- but you can't expect to receive nearly as much as the entrepreneur who started the dream or the pre-IPO investors who gave their time and business savvy as well as money to the company's success.

There is a class of what're called "accredited" investors. They are the people who get first crack at investing in private placements, in start-up companies. By law, they must have a net worth of at least $1 million or have received at least $200,000 in net income in the past 2 years and be on track to receive that this year. The Securities and Exchange Commission assumes that people who meet this requirement are big boys and girls who know how to separate good from bad investments, and can lend experience and

In RULE BREAKERS, RULE MAKERS The Motley Fool advise you to invest like an entrepreneur when looking for the rule breaking stocks that can eventually make you rich. That is, take risks. Don't play it safe. Live out the American dream of helping to launch a business. Then they go on to expand on this theme by telling readers to invest like a venture capitalist, and mention the man who helped launch Netscape's record-breaking IPO, which was the real start of the dotcom boom (and later bust).

Now, I'm all in favor of the American dream of financial independence and starting your own business and so on. If you have an idea for a product or service which will benefit the world -- great, hop to it!

But what's that go to do with investing? Yes, when you invest in a small company that may fail at any time, you are helping that company to survive the competition. You are in a sense helping to continue the American dream.

But don't confuse that with placing your money into buying stocks in the secondary market.

Yes, the purpose of the stock market in our capitalistic culture is to provide a way for entrepreneurs to raise the money they need to make their new companies survive and thrive.

But the entire purpose of the secondary market is to make sure that early investors in a company will be able to later sell their shares and make a big profit on them. It's to guarantee the existence of liquidity. The New York Stock Exchange, the NASDAQ -- all exist solely so that early investors can dump the stocks they bought when the company was brand new.

Buying stock in the secondary market is just not the same as starting a new business. There is certainly some degree of risk, but there's one huge difference.

The entrepreneur owns the dream.

Whether it's hamburgers or coffee or fizzy colas, the dream begins with the entrepreneur. The entrepreneur frequently puts their entire future on the line, and when they succeed they're rewarded accordingly.

If the FDA had approved ImClone's drug for additional trials, David Denby's shares of ImClone would have risen in price, but Sam Waskal would have become wealthy.

Venture capitalists don't own the dream of a new company, but if they believe that the new company is a potential success, they'll back it with their money.

Yet there's one small detail about venture capitalists that The Motley Fool forgot to mention, one small difference between James Doerr and ordinary investors such as you and I . . .

Venture capitalists don't just hand over their money, and then sit back wishing and hoping the entrepreneur will be successful -- they demand a large degree of control. They don't own the dream of the new company, but they seize control of its direction. They tell the entrepreneurs what to do to survive and become successful. They generally have more business experience than the entrepreneur, and will twists as many arms as necessary to guarantee the success of the business (and their far-from-passive investment).

You can't do that with Microsoft just because you own a few hundred, a few thousand or even a few hundred thousand shares.

Besides, chances are good that you don't know as much about running a business as the entrepreneur (and any venture capitalist or "angel" investor partners). You're riding along on their efforts, and you deserve a return for that -- but you can't expect to receive nearly as much as the entrepreneur who started the dream or the pre-IPO investors who gave their time and business savvy as well as money to the company's success.

There is a class of what're called "accredited" investors. They are the people who get first crack at investing in private placements, in start-up companies. By law, they must have a net worth of at least $1 million or have received at least $200,000 in net income in the past 2 years and be on track to receive that this year. The Securities and Exchange Commission assumes that people who meet this requirement are big boys and girls who know how to separate good from bad investments, and can lend experience and

Yes, the purpose of the stock market in our capitalistic culture is to provide a way for entrepreneurs to raise the money they need to make their new companies survive and thrive.

But the entire purpose of the secondary market is to make sure that early investors in a company will be able to later sell their shares and make a big profit on them. It's to guarantee the existence of liquidity. The New York Stock Exchange, the NASDAQ -- all exist solely so that early investors can dump the stocks they bought when the company was brand new.

Buying stock in the secondary market is just not the same as starting a new business. There is certainly some degree of risk, but there's one huge difference.

The entrepreneur owns the dream.

Whether it's hamburgers or coffee or fizzy colas, the dream begins with the entrepreneur. The entrepreneur frequently puts their entire future on the line, and when they succeed they're rewarded accordingly.

If the FDA had approved ImClone's drug for additional trials, David Denby's shares of ImClone would have risen in price, but Sam Waskal would have become wealthy.

Venture capitalists don't own the dream of a new company, but if they believe that the new company is a potential success, they'll back it with their money.

Yet there's one small detail about venture capitalists that The Motley Fool forgot to mention, one small difference between James Doerr and ordinary investors such as you and I . . .

Venture capitalists don't just hand over their money, and then sit back wishing and hoping the entrepreneur will be successful -- they demand a large degree of control. They don't own the dream of the new company, but they seize control of its direction. They tell the entrepreneurs what to do to survive and become successful. They generally have more business experience than the entrepreneur, and will twists as many arms as necessary to guarantee the success of the business (and their far-from-passive investment).

You can't do that with Microsoft just because you own a few hundred, a few thousand or even a few hundred thousand shares.

Besides, chances are good that you don't know as much about running a business as the entrepreneur (and any venture capitalist or "angel" investor partners). You're riding along on their efforts, and you deserve a return for that -- but you can't expect to receive nearly as much as the entrepreneur who started the dream or the pre-IPO investors who gave their time and business savvy as well as money to the company's success.

There is a class of what're called "accredited" investors. They are the people who get first crack at investing in private placements, in start-up companies. By law, they must have a net worth of at least $1 million or have received at least $200,000 in net income in the past 2 years and be on track to receive that this year. The Securities and Exchange Commission assumes that people who meet this requirement are big boys and girls who know how to separate good from bad investments, and can lend experience and

Venture capitalists don't own the dream of a new company, but if they believe that the new company is a potential success, they'll back it with their money.

Yet there's one small detail about venture capitalists that The Motley Fool forgot to mention, one small difference between James Doerr and ordinary investors such as you and I . . .

Venture capitalists don't just hand over their money, and then sit back wishing and hoping the entrepreneur will be successful -- they demand a large degree of control. They don't own the dream of the new company, but they seize control of its direction. They tell the entrepreneurs what to do to survive and become successful. They generally have more business experience than the entrepreneur, and will twists as many arms as necessary to guarantee the success of the business (and their far-from-passive investment).

You can't do that with Microsoft just because you own a few hundred, a few thousand or even a few hundred thousand shares.

Besides, chances are good that you don't know as much about running a business as the entrepreneur (and any venture capitalist or "angel" investor partners). You're riding along on their efforts, and you deserve a return for that -- but you can't expect to receive nearly as much as the entrepreneur who started the dream or the pre-IPO investors who gave their time and business savvy as well as money to the company's success.

There is a class of what're called "accredited" investors. They are the people who get first crack at investing in private placements, in start-up companies. By law, they must have a net worth of at least $1 million or have received at least $200,000 in net income in the past 2 years and be on track to receive that this year. The Securities and Exchange Commission assumes that people who meet this requirement are big boys and girls who know how to separate good from bad investments, and can lend experience and

Besides, chances are good that you don't know as much about running a business as the entrepreneur (and any venture capitalist or "angel" investor partners). You're riding along on their efforts, and you deserve a return for that -- but you can't expect to receive nearly as much as the entrepreneur who started the dream or the pre-IPO investors who gave their time and business savvy as well as money to the company's success.

There is a class of what're called "accredited" investors. They are the people who get first crack at investing in private placements, in start-up companies. By law, they must have a net worth of at least $1 million or have received at least $200,000 in net income in the past 2 years and be on track to receive that this year. The Securities and Exchange Commission assumes that people who meet this requirement are big boys and girls who know how to separate good from bad investments, and can lend experience and expertise to a new venture.

Yet even they can make many mistakes and lose lots of money. Just because you made a few million dollars in software in 1985 doesn't mean that you know how to evaluate the chances for success of a new candy bar. Just because you're a wealthy heart surgeon doesn't mean that you know how to manage a sushi restaurant.

If you're an accredited investor and have the business experience needed to evaluate the private placement offerings you're shown, you don't need advice from me.

As for the rest of you . . . I strongly suggest that when you invest you take as little risk as possible. Find good, strong companies with a long history of paying and raising dividends. That's how to have a good retirement.

If you want to be an entrepreneur, start your own business.