The SPACs are TOO DAMN HIGH!
Updated: Jan 31
Recognize that guy? Finally the rent is NOT too damn high... but SPACs are way TOO DAMN HIGH!
Until this most recent SPAC FOMO craze (Fear of Missing Out), the large majority of SPACs were trading near their Net Asset Value (NAV). Considering all SPAC common shares have a floor, this would mean the NAV is $10/share + Interest Earned... aka $10-10.50/share.
3 days ago, I wrote "SPAC FOMO" and published a list of 21 SPACs that were trading below $11/share, most of them below $10.50. As of Jan 13, 70% of the list is above $11...
Since I started SPAC investing in April, I have seen all the SPACs rise together about 10 times. Every single time, without fail, this rise of SPAC prices was followed by a SPAC BLOODBATH of 7-15%. For those that are trading Cryptos or Penny Stocks, you don't even flinch at a 15% loss... but the game of SPACs is played by buying close to the $10/share floor.
One reason for the SPAC rise is the hype surrounding recent mergers:
1. CCIV up 85% after announcing merger with top Electric Vehicle company Lucid (Click here to read about the Lucid merger)
2. ACTC up 130% after announcing merger with top EV Bus company Proterra with Chamath Palihapatiya leading a $415m PIPE (Click here to read about the Proterra merger)
Another reason is that the overall stock market is on 🔥🔥🔥
Roll the dice with any stock and if you're not up, you've got terrible luck. Everyone is crushing it and I wouldn't be shocked if profit takers start to do what they do best... take profits. The stock market has been one big oxymoron to American reality. SPACs serve as an investor safe haven because their potential risk is mitigated to only 5-30% due to their NAV floor. With tax rates and interest rates expected to rise along with the political mayhem, you can bet that short sighted stock investors will profit take... and SPACs will certainly follow.
While there are still some relative deals to be found (LCY, ZNTE, HZON), history will most likely repeat itself and the SPACs will come back down to 🌎. Here's a little Q&A I had with myself on how to take advantage of this moment & not be a reactionary Robinhood investor.
Q1. What should I do first?
STOP PROCRASTINATING & DEPOSIT INTO YOUR BROKERAGE ACCOUNT
For real, what are you waiting for? If you don't want to invest in the market or cryptos because they're in bubble territory, then SPACs are the route for you. If you've been kidnapped on a wifi-less island until now, I'll use this moment to plug my Promo Code For Robinhood.
Q2. Where can I learn about SPACs & find info?
SPACdaddy.com.... and once you've got the basics down and are looking for something more comprehensive, here are several free tools that I highly recommend:
SpacTrack.net - By far the best free SPAC Tracker on the internet
Reddit - r/SPACs - Some of the best Due Diligence is posted on here & you can find almost anything you need... but don't get lost in the bullshlachas
$tockTwits - This is the Twitter for stocks. It's filled with junk but if you can filter it out, it's one of the top places to get free news instantly
Twitter - Use the '$' instead of '#' to search SPAC ticker threads. Follow @Chamath, our fearless SPAC leader. Also follow yours truly, @SPACdaddy.
Q3. When should I invest?
Patience! Hold that cash, do some research on SPACs you like, and wait for your moment. NEVER CHASE A SPAC, ESPECIALLY WHEN THERE IS NO NEWS.
I have made it my life mission to get all my friends to invest in SPACs. If I had a dollar for the amount of friends that asked me to manage their $, I'd have just over $10. That being said, I'll literally tell you what SPACs to look at & you can invest in them yourself. Personally, I have 95% of my wealth invested into SPACs. Why? Because I'm so confident in my knowledge of SPACs & I know for a fact that I can't lose as long as I invest close to $10/share. If you need reasoning for this, read my blog about how a SPAC is structured and secured by cash in trust.