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The median return of 2022's SPAC mergers: -82%

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Re: The median return of 2022's SPAC mergers: -82%

#111

Post by throwawaymaths »

axpy wrote: post #109
iancmceachern wrote: post #100

Earlier quoted context omitted.

Didn't Ponzi make material lies about what his company did also? It just seems like a dubious distinction. More than what they did being different, I think the laws and terminology around those laws are different now. I don't think there is much pragmatic difference, mostly just semantics no?

It's not because A ==> B that B ==> A. A Ponzi scheme is a fraud but a frauds doesn't necessarily imply a Ponzi scheme. That's is not just semantic, it's a logic falacy.

I think it's still considered a ponzi scheme if you tell people exactly what you are doing.

Re: The median return of 2022's SPAC mergers: -82%

#112

Post by thefounder »

Lazare wrote: post #106
bko wrote: post #58

Earlier quoted context omitted.

How are SPACs a ponzi? My understanding is that its a pool of money that gets raised to essentially take a private organization public through a merger with (theoretically) less red tape and cost. You buy into the SPAC without knowing exactly what is being bought but at the time of purchase you have the option to redeem you investment. There are other clauses if the organizer can't find a suitable takeover target. Yo…

When people say something is a ponzi, they generally mean that they think it's deceptive, fraudulent, or otherwise unsavoury. They don't mean that it's literally the sort of scheme made infamous by Charles Ponzi. I think there's value in using precise language, so I reget this usage, but it's common whether I like it or not.

Then people should just use the correct term: Rug pull

Re: The median return of 2022's SPAC mergers: -82%

#113

Post by pjc50 »

fsckboy wrote: post #96
api wrote: post #19

Earlier quoted context omitted.

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.

False. It's hard to get cryptocurrency to do anything productive, it's hard to get cryptocurrency do anything other than gamble, pump, and dump, scam and make bubbles. But the rest of the economy has been making people's lives better for thousands of years. Would you rather live now, or a hundred years ago? a hundred years ago or 200 years ago? repeat till you're satisfied with my argument. If you hit any snags, just…

The real economy certainly makes things, but it does also evolve frauds; the difference is that they get banned and you have to think up a new type of fraud.

There's also the issue of the "business cycle". Why do we have recessions? What can be done about them? Can we mitigate the damage of crashes? Not a solved problem.

Re: The median return of 2022's SPAC mergers: -82%

#114

Post by o1y32 »

paulgb wrote: post #5
canvascritic wrote: post #2

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. 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.

The last few years "democratize finance" is often synonymous with "fraud"

Re: The median return of 2022's SPAC mergers: -82%

#115

Post by FFP999 »

iancmceachern wrote: post #92
api wrote: post #19

Earlier quoted context omitted.

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.

It's their job. The finance bros aren't engineers, technicians, doctors, writers, etc. They cook up this crap all day and sell it. But this stuff isn't real, because that's not what they do, they don't know how. Real businesses,, business that have value and add value to the world are not built by bros in suits yelling at eachother on Wallstreet. Businesses are built by the Hank Hill types wearing Levi's and showing…

You are correct...and yet, between work and finance, which pays better?

Re: The median return of 2022's SPAC mergers: -82%

#116

Post by ethbr1 »

fsckboy wrote: post #99
ethbr1 wrote: post #66

Earlier quoted context omitted.

https://en.m.wikipedia.org/wiki/The_Market_for_Lemons If there exist two pathways: 1. Regulated, standardized 2. Less regulated alternative Which sort of companies are going to dominate in #2? It's not going to be the ones that could have gone with #1, but decided not to for reasons. It's going to be a lot of companies that couldn't go with #1. Which will drag down the median of #2, which will increase the cost of us…

um, lemon markets don't get fixed by simple regulation. A seller has a motivation to sell which the buyer doesn't have direct access to: "I'm moving, need to sell my car"; "I get a new car every year, sell my old one"; "this car has tons of problems". The buyer's motivation is clear, "I want a good car for the price". Since the market is a mix of lemon cars and good cars, the prices are somewhere in between. If the p…

Lemon markets can be fixed by regulation, because regulation effectively sets a floor to cheating.

And it's cheating (or buyer perception of cheating) that increases the discount the lemon market takes to true value, which leads to lemons dominating non-lemons in that market.

The more you can do to keep lemons out of a market via regulation, the less of a discount the buyer will demand relative to true value.

Re: The median return of 2022's SPAC mergers: -82%

#117

Post by gravitronic »

sdwr wrote: post #71
bko wrote: post #58

Earlier quoted context omitted.

How are SPACs a ponzi? My understanding is that its a pool of money that gets raised to essentially take a private organization public through a merger with (theoretically) less red tape and cost. You buy into the SPAC without knowing exactly what is being bought but at the time of purchase you have the option to redeem you investment. There are other clauses if the organizer can't find a suitable takeover target. Yo…

Book smarts vs street smarts You're paying attention to the technical definition. "It's just an investment vehicle!" He's paying attention to the real-world outcome. Insiders made money by offloading bad investments onto retail suckers.

We call those scams

Re: The median return of 2022's SPAC mergers: -82%

#118

Post by newshackr »

bko wrote: post #58
Ozzie_osman wrote: post #41

Earlier quoted context omitted.

The interesting thing is a few years ago (before becoming the "SPAC King") he did a media tour where he criticized Venture Capital as being a "massive Ponzi scheme". [1] Then he went all-in on SPACs... Which ended up being the ultimate Ponzi. [1] https://www.cnbc.com/2018/10/10/start-up-economy-is-a-ponzi-...

How are SPACs a ponzi? My understanding is that its a pool of money that gets raised to essentially take a private organization public through a merger with (theoretically) less red tape and cost. You buy into the SPAC without knowing exactly what is being bought but at the time of purchase you have the option to redeem you investment. There are other clauses if the organizer can't find a suitable takeover target. Yo…

SPACs aren't a ponzi scheme but they are set up for the creator to win. Typically they get 20% of the business at lower than market rate and sometimes have clauses for them to still win if it can't find a business to acquire.

Re: The median return of 2022's SPAC mergers: -82%

#119

Post by TacticalCoder »

hn_throwaway_99 wrote: post #24

I'm always somewhat amazed that Chamath Palihapitiya doesn't have a much worse reputation: 1. My understanding is that he was the primary initial architect of "A/B testing for engagement" at Facebook that turned social media into a tribalistic, outrage generating machine (nothing engages like hate), and that the rest of SV essentially copied. I think this trajectory would have happened regardless, but he was first, s…

> I'm always somewhat amazed that Chamath Palihapitiya doesn't have a much worse reputation:

One of the thing he did right was to call out the VCs involved in the FTX scam. They all turned a very blind eye to SBF's wrongdoings while any five minutes googling before investing would have led to posts explaining the very scam SBF was running. VCs basically basically participated in the pump and dump of shit tokens by FTX. To me they're complicit in the FTX scam.

Not even five minutes. Two minutes of googling was all it took to discover who SBF really was. But I take it maybe the VCs knew but still wanted their share of the scam.

Chamath Palihapitiya very clearly talked about this: at best the complete lack of due diligence and amateurism, at worst being complicit in the Alameda/FTX scam.

He used the term "our own brethren" to refer to VCs participating and encouraging the FTX ponzi.

Re: The median return of 2022's SPAC mergers: -82%

#120

Post by datadrivenangel »

canvascritic wrote: post #2

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. 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…

Same issue with IPOs. The sponsoring banks can earn nice fees even if the stock does poorly.
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