SPACs on the whole have been underperforming the S&P 500. This might be because of manager’s fees, hype motivating Shaq et al to create terrible SPACs, or low-hanging fruit having been picked early on with hype motivating even competent managers to chase opportunity where none exists.
Being able to pick three SPACs that rose 70-200% in 2 months is still some evidence that you’re good enough at picking them to have an edge. But they’re not risk-free assets. The risk is that they tie up your money for a long time, only to underperform index funds. With a regular stock, you get to keep your money for yourself, and know exactly what you’re buying. Relinquishing control over your money for an extended period of time, and dealing with the uncertainty, both in terms of SPACs being a novel structure and not knowing what the manager will settle on, ought to come with an additional financial reward relative to purchasing stocks. So it makes some sense to me that you’d expect higher returns over a conventional high-risk stock.
Being able to pick three SPACs that rose 70-200% in 2 months is still some evidence that you’re good enough at picking them to have an edge. But they’re not risk-free assets. The risk is that they tie up your money for a long time, only to underperform index funds.
I kept a ~100% exposure to the overall market, and the SPAC purchases were on top of that (i.e., leveraged), financed with SPX box spreads.
SPACs on the whole have been underperforming the S&P 500. This might be because of manager’s fees, hype motivating Shaq et al to create terrible SPACs, or low-hanging fruit having been picked early on with hype motivating even competent managers to chase opportunity where none exists.
Being able to pick three SPACs that rose 70-200% in 2 months is still some evidence that you’re good enough at picking them to have an edge. But they’re not risk-free assets. The risk is that they tie up your money for a long time, only to underperform index funds. With a regular stock, you get to keep your money for yourself, and know exactly what you’re buying. Relinquishing control over your money for an extended period of time, and dealing with the uncertainty, both in terms of SPACs being a novel structure and not knowing what the manager will settle on, ought to come with an additional financial reward relative to purchasing stocks. So it makes some sense to me that you’d expect higher returns over a conventional high-risk stock.
I kept a ~100% exposure to the overall market, and the SPAC purchases were on top of that (i.e., leveraged), financed with SPX box spreads.