Legislative Overkill

  

Categories: Regulations

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 are Systematic and Unsyste...14 Views

00:00

finance a la shmoop what are systemic and unsystematic risk systemic risks are

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just endemic to the market want to invest in the stock market and compound [Plate of vegetable appear]

00:13

return your way into great wealth great but then you'll suffer the normal risk

00:19

of the system that risk specifically is this yeah best of times worst of times

00:25

but up over time the market goes up you just have to embrace the notion that [Man hugging a tree]

00:31

there is systemic risk in that in the short run you can buy an S&P 500 index

00:36

fund here then lose like a third or whatever of your money in not too many

00:41

years but if you don't panic and sell just at the wrong time here right out

00:45

the storm and keep going well then you should be just fine by the time you

00:49

arrive here so that's risk that is always in the system equities rise and [Equity in the ocean]

00:55

fall like the tides or something like that but generally they rise and if you

01:00

want to swim in this bathtub well you get used to the turbulence and have an [Girl swimming against the tide]

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airsick bag handy all right that systemic risk or systemic risk

01:08

what's unsystematic risk well it's bad investors or rather bad investing it's

01:14

panicking and selling your stock just when you should be doubling down its

01:18

buying lousy companies thinking that they're cheap today but not realizing [Woman runs away from smelly girl]

01:23

that they will always be cheap because they're lousy or in a lousy industry or

01:27

run by lousy management it's buying into lousy industries that also look cheap

01:31

but are dying hello paper and pulp is yeah anyone really think that's gonna be [Paper printing]

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around in 20 years all right well it's believing the dreamy hopes and prayers

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of future earnings and trusting that there really will be 5 million [Traffic on the highway]

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driverless cars on the road in 3 years you know good luck with that we'd love

01:48

it to be true but ain't gonna be unsystematic risk is also investing in

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bonds for the long-term taking very little risk when taking little risk is

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the opposite of what you should be doing when you're a young investor so yeah

02:01

systematic and unsystematic risk both exist plentifully and both can bite you [Dog bites portfolio from woman]

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right in the portfolio so you got to know what both are and embrace them

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for what they're worth

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