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The rise and acceptance of SPACs is the clearest sign we're in a bubble. I hope we don't look back at 2021 the way we do at 1999...

_huayra_ 6y ago
In what way do SPACs indicate we're in a bubble to you? I don't disagree that we're in a bubble, but I don't understand much about SPACs and wonder what they indicate more precisely.
- RyanShook 6y ago
  IMO SPACs as an alternative to IPO are good for founders. I don't think they are good for markets because they indicate that investors don't currently care what their money is invested in, they just expect the manager to provide huge returns with very little due diligence. In this market it feels impossible to lose and SPACs have exploded because everyone is willing to write a blank check.
- mrorbitman 6y ago
  The argument I usually hear is that SPACs = speculation. Most of the time investors are investing based on a rumor, and on top of that they are investing before they have access to the company's fundamentals/disclosures available after companies go public. Lots of speculative energy is often considered an indication of a market bubble.
jchonphoenix 6y ago
How does a SPAC indicate a bubble? They're an alternative to an IPO with very clear pros and cons relative to an IPO itself. Or do you mean to say the number of companies going public indicates a bubble?
- rsj_hn 6y ago
  yeah, whether we are in a bubble or not is a question of valuation, not specific instruments.
- wyxuan 6y ago
  I was very disappointed to see that Taibibi piece hit the front page regarding SPACs and how they are a bubble. More companies are going public, and there are even some undervalued SPACs. The key issue is overinflated asset prices, not SPACs.
  - YinLuck- 6y ago
    The kind of SPACs we are seeing is what indicates something is fishy. Just look Lucid Motors. They have no product -- their first car is still in development... and yet they are about to be a public company with a market cap that matches or exceeds many in the SP500.
- grey-area 6y ago
  How does a SPAC indicate a bubble? It's a blank cheque company, common in bubbles, from the first one 300 years ago to today, along with inexplicable valuations (highest in history), a lack of distinction between speculation and investment, ordinary people getting involved, the capitulation of shorts (everyone is long). There are so many signs.

_huayra_ 6y ago

In what way do SPACs indicate we're in a bubble to you? I don't disagree that we're in a bubble, but I don't understand much about SPACs and wonder what they indicate more precisely.

RyanShook 6y ago
IMO SPACs as an alternative to IPO are good for founders. I don't think they are good for markets because they indicate that investors don't currently care what their money is invested in, they just expect the manager to provide huge returns with very little due diligence. In this market it feels impossible to lose and SPACs have exploded because everyone is willing to write a blank check.
mrorbitman 6y ago
The argument I usually hear is that SPACs = speculation. Most of the time investors are investing based on a rumor, and on top of that they are investing before they have access to the company's fundamentals/disclosures available after companies go public. Lots of speculative energy is often considered an indication of a market bubble.

jchonphoenix 6y ago

How does a SPAC indicate a bubble? They're an alternative to an IPO with very clear pros and cons relative to an IPO itself. Or do you mean to say the number of companies going public indicates a bubble?

rsj_hn 6y ago
yeah, whether we are in a bubble or not is a question of valuation, not specific instruments.
wyxuan 6y ago
I was very disappointed to see that Taibibi piece hit the front page regarding SPACs and how they are a bubble. More companies are going public, and there are even some undervalued SPACs. The key issue is overinflated asset prices, not SPACs.
- YinLuck- 6y ago
  The kind of SPACs we are seeing is what indicates something is fishy. Just look Lucid Motors. They have no product -- their first car is still in development... and yet they are about to be a public company with a market cap that matches or exceeds many in the SP500.
grey-area 6y ago
How does a SPAC indicate a bubble? It's a blank cheque company, common in bubbles, from the first one 300 years ago to today, along with inexplicable valuations (highest in history), a lack of distinction between speculation and investment, ordinary people getting involved, the capitulation of shorts (everyone is long). There are so many signs.