Don’t Get Burned: How to Be a Successful SPAC Trader
Over the weekend, I explained what I look for when investing in a SPAC, or special purpose acquisition company.
SPACs are fascinating companies — and opportunities — to follow. And just like traditional investments, you need a strong SPAC trading strategy.
The idea, of course, is to buy low and sell high. It always sounds easy enough… in theory.
But don’t make the mistake others do in regard to a lot of SPACs on the market: Many of them are not investments. Not in the traditional sense at least.
Let me explain what I mean…
SPAC Trading Strategy: Investing vs. Speculating
WealthPress’ Jeff Yastine
Investing in a SPAC has been all the rage the past year or so, and it’s basically a pool of money in search of an acquisition deal. In fact, 2020 saw a record run of SPAC sponsors issuing initial public offerings, with four times as many popping up than in 2019.
Today I’d like to discuss more about your SPAC trading strategy… And how to recognize the crucial difference between speculating — hoping — that a SPAC will go higher versus traditional investing.
This is a classic mistake most newbies make when getting involved with a stock they think is going to go up — pure speculation. They buy too much and then it goes down. That’s when it becomes an “investment” that many people choose to — or have to — hold until it comes back up.
This could take months or even years — just ask pot stock speculators left holding the bag the past couple of years.
In today’s video, I dissect an old recommendation I made a couple of years ago in a SPAC that is up more than 100% since. Point being, don’t make the mistake of getting into a dubious SPAC without much of a business underneath it.
So check out my short video and let’s chat about my SPAC trading strategy. Then leave your thoughts in the comments below. You can also see my appearance this week on Cheddar, where we discussed SPACs and how to time them.
And as always, send your investing questions to jeff@yastine.com. Be sure to subscribe to my new YouTube channel. You can also follow me on Twitter and Facebook.
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