This is simply unbelievable.

For a long time, a very wealthy friend of mine who is an extremely good money manager had been sharing his IRA portfolio, and every buy or sell action he took, with anyone who asked to be added to his email list. He is the kind of guy the EMH (efficient markets hypothesis) assures us cannot exist, who pretty consistently and very impressively beat the market. His lifetime return on the account is in excess of 40% annually, and that includes the years of the recent financial crisis.

So if you wanted to invest exactly the same way he was, you could easily do so.

Not anymore. Now the government has chosen to protect us from people like him. From his email to friends:

This list began many years ago and grew out of my desire to help others who are friends but are not professional investors.  The list started as a small group of friends and family but over time I added names as people asked for assistance.  My thought process was that I would be doing a good deed. I figured from a “karma” point of view that I would be rewarded for sharing my best thinking.  I did not guarantee success, but I guaranteed honesty in what I am doing .  That is, I would report every single trade.  Then each person could make their own decision whether to follow me or not.   Those who have read Clausen’s The Richest Man In Babylon know that the simple key to growing wealth is to save 10% of what you make and invest it the way rich people invest.  I never contributed more than $40,000 per year to the account and it is now over $6.0 million.  My compound annual return from inception in 2003 is 42.76% and my return for the last five years (including 2011 down) is 52.96%.  So it has performed well.

I never imagined that sending out this list hurt anybody, or in any way conflicted with my role as a the manager of an investment fund.  I was not charging for advice and I was not selling anything.  To use an analogy, it was as if I knew how to cook and I was sending out good recipes to friends.   I made no implied or other commitment.  I often advised people to seek their own counsel.  Everyone who was on the list was an adult.  In fact, many of the people on the list had expressed an interest in investing in our fund but they did not qualify under the oppressive government rules which prevent average savers from investing $10,000 or $30,000 with me.  By law (a law that the big brokers and mutual funds love by the way) you can only invest in my fund if you are a “qualified investor” meaning you have assets of $1.5 million or earn $200,000 or both.   Theoretically this is to protect small investors, but in reality what it does is restrict them from doing what they want and forces them to either invest on their own (think sheep sitting down with wolves to discuss dinner) or to hand their money over to the mutual fund industry (think sheep giving themselves to wolves).   The LAW will not let you invest your money as you see fit.   All for your protection of course.  Personally, I think this is wrong.  You should have the freedom to make your own choices.

So, since people expressed an interest in investing with me but could not, I added them to my IRA list.  I tell you what I am doing, you make your own decisions, and no harm, no foul.  I have always been very careful to only disclose my trades after [our] Fund had taken its own positions.  In other words I have a fiduciary responsibility to put my investors first and I have always done so.  This has been clearly disclosed to the IRA list several times.  Unfortunately, with the passage of the Dodd Frank Bill and with the increasing size and success of [our firm] it now looks nearly certain that we are going to be subject to much stricter government regulation from the State of Massachusetts and the US Federal Government.  Ironically, these organizations could not catch Bernie Madoff when they had a concerned citizen (Markopolous) pointing out the fraud.  They have refused to prosecute the people at MF Global who stole customer money.  Yet, they find it important that they monitor all of my emails and instant messages to make sure I am not doing anything illegal.  The level of filings and registrations that we will have to go through are extremely burdensome.  Frankly, I find it outrageous and disgusting that I cannot tell my friends what stocks I buy.  I would think it would be protected under freedom of speech, yet in the securities industry nothing is so simple.  I have been informed by my partner and multiple lawyers that I can no longer disclose what stocks I am buying and run an investment fund.  Personally, I would like to fight this in court, but I have a responsibility to my partner and to my investors to focus on investing well.  Therefore, I have to stop disclosing what we are doing.  For that I apologize.