Investing

The SPAC Fad

SPACs are having (another) moment.  SPAC stands for Special Purpose Acquisition Company.  Often referred to as “blank-check” companies, a SPAC is initially just a management team.  The team raises funds via IPO.  Investors bet that the team will buy a private business and make it more valuable.  Usually, the team specializes in a particular area.  The last time SPACs were popular, management teams with experience in the energy sector were buying shale assets.  Today, SPAC activity covers a wider range of ground.  From gambling (Draft Kings) to space travel (Virgin Galactic), money is being raised to sidestep the traditional IPO in favor of SPACs. Not All Good Electric truck maker Nikola was an early darling of the SPAC movement.  Nikola was supposed to be the Tesla (get it?) of the truck world.  Truck orders poured in from Anheuser-Busch.  Large investment firms across the world scrambled to buy in.  General Motors…

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Why Don’t More People Smoke?

Another prominent figure in the world of finance has declared passive investing a bubble.  Josh Brown has a good take on this here, saying that active investing is the true bubble.  I don’t think you can declare a decades-long phenomenon (as both active and passive investing have achieved) a bubble, but we can recognize that passive investing has changed the way people build wealth.  Passive investing has clear advantages over active management.  I won’t rehash it in this post, but if you’re curious I covered it here, here, and here.  It seems to me that the advent of passive investing is like the rise of health consciousness.  As we learned more about what we should (exercising) and shouldn’t (smoking) be doing, we have changed our habits.  The same is true about investing. Why Don’t More People Smoke? I recently went to the doctor and she asked me if I smoke.  My family…