I'm new to the term SPAC and had to look it up. https://www.investopedia.com/terms/s/spac.asp
Based on the definition, is it proper to call it a "merger"? It seems more like what SPACs do is "acquire".
The median return of 2022's SPAC mergers: -82%
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Re: The median return of 2022's SPAC mergers: -82%
#12SPACs, in theory, democratized access to late-stage private markets, aiming to give retail investors an early seat at the table. but like many financial innovations, they're tools that can be wielded wisely or poorly. the high failure rate suggests a misalignment of incentives: founders and sponsors capture immediate liquidity, while long-term outcomes get obfuscated by the structure. I once had a chat with a founder…
A more cynical take is that financial innovation is roughly the task of figuring out how to leave retail investors holding the bag while insiders/financial service providers make off with a kings' ransom in commissions.
In that sense a "matured understanding" is just regulation. And it seems a tall stretch to imagine SPACs reaching that when their sole existence is a loophole in regulation designed to protect retail investors from exactly these kinds of losses.
Re: The median return of 2022's SPAC mergers: -82%
#13Yeah, you all can sit here and make jokes on HN, but you’re not the man in the arena.
Such an honorable enterprise, fighting to secure exit liquidity from dud investments.
Re: The median return of 2022's SPAC mergers: -82%
#14> So, eh, awkward, but maybe this SPAC stuff destroyed more value than it created?
The money didn’t disappear and those shares created were never worth anything.
Re: The median return of 2022's SPAC mergers: -82%
#15Median? Who cares.
$1 bet. Roll a dice.
If you get 1,2 you get zero Otherwise $1.3
Median return is 30% plus prinicpal.
Re: The median return of 2022's SPAC mergers: -82%
#16Inverse SPAC ETF when?
Re: The median return of 2022's SPAC mergers: -82%
#17Yeah, you all can sit here and make jokes on HN, but you’re not the man in the arena.
When the man in the arena is Jordan Belfort: yes, jokes are appropriate.
Re: The median return of 2022's SPAC mergers: -82%
#18SPACs, in theory, democratized access to late-stage private markets, aiming to give retail investors an early seat at the table. but like many financial innovations, they're tools that can be wielded wisely or poorly. the high failure rate suggests a misalignment of incentives: founders and sponsors capture immediate liquidity, while long-term outcomes get obfuscated by the structure. I once had a chat with a founder…
> SPACs, in theory, democratized access to late-stage private markets, aiming to give retail investors an early seat at the table. but like many financial innovations, they're tools that can be wielded wisely or poorly.
This is highly misleading IMO. The democratization narrative is a complete marketing ploy — anyone that understands how the SPAC structure works would not call it “democratic” in any sense of the term. Participants in the SPAC fund and buyers of the public market equity are two completely different parties. For one the funders of the SPAC get their capital back (plus interest) if the SPAC fails to find a target. But even when they find one, the funders get many sweeteners over and above the resulting equity shares. In some cases there are minimum payouts and all kinds of other things that create a two tiered system.
The SPAC “craze” can be boiled down to a few causes — overheated stock speculation that caused retail investors to put their money all over the board, and low interest rates that made this kind of risk free betting possible (the opportunity cost was very low when T-bills paid nothing). It was a way for companies to specifically and intentionally avoid public market regulations to sell to a perceived “dumb money” retail pool. There’s absolutely nothing democratic about it. Also why many of the companies using SPACs were “retail friendly” businesses like electric car companies that were perceived to be “exciting businesses” for retail buyers.
Re: The median return of 2022's SPAC mergers: -82%
#19SPACs, in theory, democratized access to late-stage private markets, aiming to give retail investors an early seat at the table. but like many financial innovations, they're tools that can be wielded wisely or poorly. the high failure rate suggests a misalignment of incentives: founders and sponsors capture immediate liquidity, while long-term outcomes get obfuscated by the structure. I once had a chat with a founder…
> SPACs, in theory, democratized access to late-stage private markets Working in finance made me extremely cynical about anything that claims to “democratize” finance. It’s a great idea, as you say, in theory; but in practice what gets branded as “democratization” is really selling retail investors on the table scraps that professionals have already picked over.
One of the things I've learned watching the cryptocurrency saga is this:
It's hard to get money to be productive. It's hard to get a financial system to do anything other than gamble, pump and dump, scam, and make bubbles.
Re: The median return of 2022's SPAC mergers: -82%
#20Yeah, you all can sit here and make jokes on HN, but you’re not the man in the arena.
This is a reference to https://nitter.net/chamath/status/1693992134796603477 I believe.