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

pranshum.yarn.tech

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

#121

Post by affinepplan »

quickthrower2 wrote: post #45
yellowstuff wrote: post #35

Earlier quoted context omitted.

I’m a quant. If all you care about is the realized return of a equal-weighted portfolio than sure, just look at mean return. If you’re trying to understand a strategy in depth you’ll want to look at the entire distribution of hypothetical returns, precisely because financial returns are fat-tailed and portfolio returns are often driven by outliers. I don’t know about SPACs, but for common stock often the outlier retu…

Sure. What I mean is there is only so much space in a headline. Give one stat to report the success, the weighted mean is best. It represents the laymens idea if what did I get out if I put $1 across all of it. Imagine a headline about the median SPY company growth in 2022. That number isn’t how much the SPY went up.

> That number isn’t how much the SPY went up

neither is the return from putting $1 across all of SPY

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

#122

Post by VirusNewbie »

hn_throwaway_99 wrote: post #72
epgui wrote: post #62

Earlier quoted context omitted.

Not everything that is a bad investment is a Ponzi scheme.

For some reason calling out "it's not achshually a Ponzi scheme!" is the new "correlation is not causation!!" Yes, I agree with you, it doesn't have the features of the Wikipedia definition of a Ponzi scheme. But language changes over time. I think the salient point that people now think about when calling things a Ponzi scheme is "Early investors are aware that, at its root, the investment sucks. So their goal is to…

That is extremely different than a ponzi scheme. Plenty of people who buy and sell stock every day think the underlying investment sucks.

Using imprecise wording should be discouraged and it reflects poorly on people who do so.

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

#123

Post by nonameiguess »

hn_throwaway_99 wrote: post #72
epgui wrote: post #62

Earlier quoted context omitted.

Not everything that is a bad investment is a Ponzi scheme.

For some reason calling out "it's not achshually a Ponzi scheme!" is the new "correlation is not causation!!" Yes, I agree with you, it doesn't have the features of the Wikipedia definition of a Ponzi scheme. But language changes over time. I think the salient point that people now think about when calling things a Ponzi scheme is "Early investors are aware that, at its root, the investment sucks. So their goal is to…

You described any business going south where the incumbent insiders know that and future investors do not. As long as the company sells some sort of real product and earns revenue, even if it's lying about how much or the quality of that product, it's not a Ponzi. What makes a Ponzi is money from investors is the only money at all. There is no actual investment being made, not even bad ones.

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

#124

Post by iancmceachern »

FFP999 wrote: post #115
iancmceachern wrote: post #92

Earlier quoted context omitted.

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?

Finance of course. If you're born into that class, then go for it. If you're not, you gotta work first, then if you're lucky and diligent you have a shot at moving up into it later in life. Most average folks of average background can't just decide to be a big finance person on Wall Street. You gotta know people, you know, cronies, cronie capitalism, but it's not just limited to political ties, it's nepotism, etc.

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

#125

Post by falseAss »

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…

Can someone verify - did he really the architect for A/B test at early Facebook? It’s undoubtedly one of the worst Pandora’s box at internet history, but I do have respect for who created this - it’s probably the largest scale statistic application ever.

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

#126

Post by daveguy »

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…

This is the key point:

> essentially trying to get around regulatory and reporting requirements.

It's just a great tool for a ponzi scheme. A ponzi tool rather than a ponzi scheme. When it gets so tightly coupled to the schemes it enables specifically to get around regulatory and reporting requirements... Tomato, Tomahto.

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

#127

Post by daveguy »

comex wrote: post #110
Lazare wrote: post #106

Earlier quoted context omitted.

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.

Most of the time I’ve seen something called a Ponzi scheme, there is at least some purported element where earlier investors in an asset make money off of later investors in the same asset, without the asset’s true worth actually increasing. That definition isn’t hard to satisfy – it could be something as simple as a stock price becoming overinflated due to hype – and it may even apply to SPACs, but it’s still a more…

Earlier investors = VCs funding a bunk company.

Later investors = SPAC pawns putting up money for a bad investment that doesn't require the normal regulatory scrutiny that an IPO requires.

If not Ponzi, seems very Ponzi-like.

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

#128

Post by CraigRo »

eigenvalue wrote: post #70

This is one of those things that was just totally obvious to professional market participants while it was happening. I was working as an investment analyst at a huge ($10b+ AUM) hedge fund at the time and couldn’t believe the insanity and greed that was being displayed daily by SPAC sponsors and “investors”. Often the way this game worked was that if you were a large institutional investor who could be relied on to…

I had trouble believing that these things were even legal given that we'd made the same mistakes during the 1920s. The very idea of 'let's form a company to get a bunch of money but we're not going to tell you what for' is entirely reminiscent of the south seas bubble language from the 1720s. I'm glad the SEC finally effectively killed these things.

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

#129

Post by eigenvalue »

CraigRo wrote: post #128
eigenvalue wrote: post #70

This is one of those things that was just totally obvious to professional market participants while it was happening. I was working as an investment analyst at a huge ($10b+ AUM) hedge fund at the time and couldn’t believe the insanity and greed that was being displayed daily by SPAC sponsors and “investors”. Often the way this game worked was that if you were a large institutional investor who could be relied on to…

I had trouble believing that these things were even legal given that we'd made the same mistakes during the 1920s. The very idea of 'let's form a company to get a bunch of money but we're not going to tell you what for' is entirely reminiscent of the south seas bubble language from the 1720s. I'm glad the SEC finally effectively killed these things.

Yes, just like the joint stock company that someone attempted to float during the time of the South Sea bubble that was described in the Madness of Crowds as being “For carrying-on an undertaking of great advantage but no-one to know what it is.”

That always made me laugh. Crazy then and crazy now.

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

#130

Post by epgui »

throwawaymaths wrote: post #111
axpy wrote: post #109

Earlier quoted context omitted.

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.

I believe that may be correct, although in practice there is often/usually/historically-always (?) deception involved, because presumably no morally competent adult would willingly give their money to an honest Ponzi unless they knew they stood to benefit by being one of the first to pull out.

But as you point out, I don't think deception per se is really the defining feature of the Ponzi.

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