The world of Special Purpose Acquisition Companies, oh how we love them. They have become hugely popular in the past year. I think they offer value when it comes to trading them. As far as the value they offer as a business long-term, I don’t care. I am a trader.
I don’t like to be bored so I won’t bore you with some definition of what a SPAC is if you are unfamiliar. That’s what Google is for. What I want to focus on is the fact that SPACS are the shiny new toy everyone wants to trade.
From electric vehicles manufacturers to betting companies, it is a growing list. In 2020 alone there were about 200 SPACS that raised about $64 billion, versus 194 traditional IPO deals that raised $64 billion.
Crazy stuff to think about.
However, in the meantime, these stocks come on the market and by and large have garnered a ton of attention and momentum as well as volatility.
Well, there is your answer. Traders love and thrive off of momentum and volatility. We traders (not all) go to where all the eyes are focused and capitalize on those opportunities.
I call these stocks the shiny new toys because eventually things fade and the interest dries up. It has certainly happened in late 2020 and early 2021. Oh, every now and then someone on Twitter or a Reddit subgroup gets the fire lit for a few days. It probably helps a big fish exit, but the momentum traders jump in and out scalping along the way.
Meanwhile, I sit back and watch the show, popcorn in hand, because frankly, that is not a way to be successful trading long term. Chasing the next thing, and the next thing, eventually it will blow up in your face.
I prefer slow and steady trading, keeping things simple. Capturing our tiny (relative to the billions that are moving daily) piece of the money pie. This affords us a great living and the ability to do what we want, whenever we want it, all thanks to trading.
Listen, I don’t care what the next fad is in fashion, who got voted off the island, or even if that #1 sitcom got canceled or is headed to its fifth season. So I am certainly not going to care about what everyone is chasing in the market. Meme stocks, SPACS, crypto-related names, go for it if that is your thing.
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