Forward View
What's So Special About SPACs?
Over lunch, I heard Jim Cramer ranting on CNBC that "Anyone who is anyone has a SPAC right now." That's not too far from the truth... legendary hedge fund manager Bill Ackman, NBA giant Shaquille O'Neal, and Congressional house leader Paul Ryan have all started up their own SPACs this year.

Special Purpose Acquisition Companies offer the allure of mingling with the rich (and sometimes famous) and provide an opportunity for rapid gains.

Sometimes known as "blank check" investments, SPACs are type of shell corporation that raises capital in the public market for future acquisitions. Investors pour money into SPACs on good faith, not knowing how their funds will be invested.

Although shareholders have a right to vote on acquisitions, SPACs can go for months or years before making a single deal.

The advantage is that SPACs can provide a back-door path to IPO more quickly and with less oversight than a conventional Initial Public Offering. It's how more deals are getting done during COVID.

Over 200 SPACs have raised funds this year, all of them searching for investment deals. There were just 13 SPAC offerings in 2016.

Sound a little sketchy? Well, maybe.

Several notable companies have gone public via SPAC this year, including Draft Kings, Playboy Enterprises, Virgin Galactic, and Nikola.

Electric truck maker Nikola provided a wild ride for investors. Shares surged 800% last spring, only to lose 75% of their value after the company experienced accusations of fraud.

I've missed out on the excitement of SPACs this year. It feels like a type of bubble that happens when too much money chases too few opportunities.

When I look at investments, I screen out prospects that can't offer three things:

1) Transparency
2) Daily pricing
3) Liquidity (the ability to sell easily)

These three criteria help me to manage problem investments. Transparency makes it possible to know when I've made a mistake. Daily pricing gives me quick insight into the size of the mistake, and liquidity enables me to cut losses before they get completely out of control.

With SPACs, you don't know what you'll end up owning.

I'll take a pass on this "next big thing."

-Jim Lee, CFA, CMT, CFP®
Upcoming Event - November 11th
The !Spark Disrupters virtual conference brings together fiercely independent thinkers from diverse fields like music, food, science, art, politics, and investing. The goal? Driving positive impact to the wider world and facilitating inspired thinking that leads to positive disruption.

This event delivers opportunities and solutions for financial advisors and investors presented by world-class thought leaders. In addition to provocative keynotes, !Spark brings energy, fun, and innovation with its Carpe Diem sessions and unique hybrid breakouts and networking format.

Presenters include George Will (Washington Post), Bob Pisani (CNBC), Cathy Wood (ArkInvest), Matt Hougan (Bitwise) Rob Arnott (Research Affiliates), Mike Venuto (Toroso Investments) and Barry Ritholtz (Ritholtz Management).

Jim Lee will be a panelist sharing his thoughts on disruption in the business of providing financial advice.

Just for Fun... 9 Dance Moves Inspired by 2020's Chaos
Here are some iconic steps to commemorate the year with, from the “Can I Get Six Feet, Please” to the “I Miss Obama." This made me smile!

Disclosure: Information contained herein is for educational purposes only and is not to be considered a recommendation to buy or sell any security or investment advice. Securities listed herein are for illustrative purposes only and are not to be considered a recommendation. The author may personally hold positions in securities mentioned.

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