It seems like only yesterday the “SPAC Boom” was all you heard about. And for good reason, exclaims Mike Larson, editor of Safe Money Report.
Retail investors were clamoring to buy shares of Special Purpose Acquisition Companies in order to gain exposure to overhyped sub-sectors of tech like electric vehicles and space tourism. Almost 300 SPACs went public in the first quarter, raising an all-time record $88 billion.
That boom went hand-in-hand with other crazy trends. That included a surge in Initial Public Offerings from money-losing companies and moonshot moves from “Reddit stocks” like GameStop (GME).
Me? I warned in late January that this kind of manic behavior was extremely dangerous. So, how did that work out?
Well, investors who bought GME at the close on the day my January piece was published are now sitting on losses of around 59%. Investors who bought shares of the high-profile space SPAC Virgin Galactic Holdings (SPCE) the day my February piece hit have lost roughly 68%.
These aren’t just cherry-picked examples, either. The Defiance Next Gen SPAC Derived ETF (SPAK) owns 211 SPACs and shares of SPAC-derived IPOs. But that diversification hasn’t helped its shareholders much. SPAK has lost 28% of its value since early February.
At the same time, many of the stocks and funds have done nothing but climb! Why? They sport higher Weiss Ratings, juicier dividend yields, more sustainable profits, and strong track records of success in all kinds of business environments.
Safe Money Report focuses on these kinds of stocks, which include names in the consumer staples, food and beverage, retail, and healthcare sectors. Visit Safe Money Report here.
