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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%

#91

Post by iancmceachern »

epgui wrote: post #69
mlyle wrote: post #65

Earlier quoted context omitted.

SPACs may not always be ponzi schemes, but plenty are of dubious, unvetted businesses and for the principle purpose of paying returns to prior investors.

Yes, but that's only superficially similar to a Ponzi scheme. They're just not Ponzi schemes.

How so? I'm genuinely curious, what are the specific distinctions? Many others consider it so:

"Holmes duped just about everyone about the efficacy of Edison. For 12 years, she essentially ran a Ponzi scheme by attracting millions of dollars from primarily venture capitalists that saw it as a unique opportunity to cash in on the boom in Silicon Valley."

https://www.ethicssage.com/2022/01/fake-it-until-you-make-it...

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

#92

Post by iancmceachern »

api wrote: post #19
paulgb wrote: post #5

Earlier quoted context omitted.

> 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.

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 up to work in snowstorms and summer heat to load trucks and weld iron. Value isn't created by a stock ticker, it's created with the blood sweat and tears of the common person. Finance bros do not know how to bleed, sweat or cry - so they can't make things of real value.

Case and point, Warren Buffet.

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

#93

Post by hckrnrd »

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…

There’s a reason he’s known as Scamath Palihapitiya amongst most serious traders. Dude is a joke.

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

#94

Post by DanHulton »

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…

Whenever I see the term "democratizing access," my spidey-sense starts to tingle and I get a strong suspicion that I'm about to encounter something kinda-to-very skeezy that _really_ needs a good "power to the people" cover story in order to be accepted.

SPACs, it would seem, are not an exception.

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

#95

Post by [deleted] »

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.

[deleted]

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

#96

Post by fsckboy »

api wrote: post #19
paulgb wrote: post #5

Earlier quoted context omitted.

> 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.

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 repeat a few times more.

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

#97

Post by [deleted] »

iancmceachern wrote: post #91
epgui wrote: post #69

Earlier quoted context omitted.

Yes, but that's only superficially similar to a Ponzi scheme. They're just not Ponzi schemes.

How so? I'm genuinely curious, what are the specific distinctions? Many others consider it so: "Holmes duped just about everyone about the efficacy of Edison. For 12 years, she essentially ran a Ponzi scheme by attracting millions of dollars from primarily venture capitalists that saw it as a unique opportunity to cash in on the boom in Silicon Valley." https://www.ethicssage.com/2022/01/fake-it-until-you-make-it...

[deleted]

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

#98

Post by throwawaymaths »

iancmceachern wrote: post #90
throwawaymaths wrote: post #85

Earlier quoted context omitted.

I lot of legitimate businesses fall into that category. Also illegitimate businesss. Theranos was definitely illegitimate (and had the characteristic of little fish investors trying to sell to bigger fish), but it would be a pretty severe category error to call it a ponzi scheme.

I dont agree, many others consider what she did no different than a ponzi scheme. It's not just me and the patent commenter: "Holmes duped just about everyone about the efficacy of Edison. For 12 years, she essentially ran a Ponzi scheme by attracting millions of dollars from primarily venture capitalists that saw it as a unique opportunity to cash in on the boom in Silicon Valley." https://www.ethicssage.com/2022/01…

Theranos was fraud. She made material lies about what the machines do.

Ponzis are accounting malpractice that don't even necessarily involve defrauding anyone.

It's a problem if you're going to call everything that goes south a ponzi scheme, because it elides failure modes and dulls peoples ability to distingush and analyze bad situations. Is social security, for example, a ponzi scheme?

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

#99

Post by fsckboy »

ethbr1 wrote: post #66
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…

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 prices for good cars reflect lemons, the guy selling will say "I can't get enough for my car, I'll buy a new car every two years." The guys with the lemons still want to sell their cars. Now there are fewer good cars in the pool, and prices drop even more.

Now the guy who is moving will try to find somebody in his family he can sell it too, but the lemon guys still want to sell theirs.

This is why a brand new car loses so much value the minute you drive it off the lot. It's not a problem that can be completely solved with regulation; although some of the large players, like rental car companies, can be more easily regulated to not roll their odometers back, keep repair records, etc. However, they still get caught cheating.

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

#100

Post by iancmceachern »

throwawaymaths wrote: post #98
iancmceachern wrote: post #90

Earlier quoted context omitted.

I dont agree, many others consider what she did no different than a ponzi scheme. It's not just me and the patent commenter: "Holmes duped just about everyone about the efficacy of Edison. For 12 years, she essentially ran a Ponzi scheme by attracting millions of dollars from primarily venture capitalists that saw it as a unique opportunity to cash in on the boom in Silicon Valley." https://www.ethicssage.com/2022/01…

Theranos was fraud. She made material lies about what the machines do. Ponzis are accounting malpractice that don't even necessarily involve defrauding anyone. It's a problem if you're going to call everything that goes south a ponzi scheme, because it elides failure modes and dulls peoples ability to distingush and analyze bad situations. Is social security, for example, a ponzi scheme?

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?
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