Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A6832345649355255808
Learn from #Millennial #Investors Who Lost #Millions on A #SPAC: “Buy the Rumor, Sell the News”: First Lesson Any Investor Learns… #SPAC #Options #Finance #Trading #Markets #WallStreet: “Most investors in #SPACs have lost money over time, with a Renaissance Capital study last year showing a median loss of 29 % between 2015 and September 2020 for the companies’ shares post-merger.”:
https://lnkd.in/ecB3J39T :
“What we don’t want people doing is speculating, buying short-dated #options on our SPAC”: “I’m done with SPACs… This is the worst thing that has ever happened to me.”: In retrospect, the #psychiatrist believes “ #mob #mentality ” is at fault. “It’s how you can get caught up in something and not be able to separate yourself and think, ‘Is this actually the #right #thing, or am I making the #right #decision?’ Because you’re just so caught up in it.” “There were so many #rumors floating around. He didn’t deny a single one. And I think that’s what culminated in the #hype and the #sentiment, which got everything kind of inflated.”
The inherent #leverage of #options works great on the upside, of course. But in contrast to #common #stock, an #investor can’t just buy and hold. #Options #trading involves both a #time element (the expiration date) and a specific #price (the strike price). An investor has to be right on both, trading the #volatility along the way.
By last fall, the #SEC was concerned about what the #explosion of #blankcheck companies portended for retail investors. Most #investors in #SPACs have lost money over time, with a #RenaissanceCapital study last year showing a median loss of 29 % between 2015 and September 2020 for the companies’ shares post-merger.
The #trading #app has been criticized for its creation of what’s become known as #gamified #investing. “When you put money into an account in Robinhood, it causes confetti to come out of the screen; it tries to draw you in.”
#Robinhood also makes #trading #options #seem #easy. “They #dumb it down for you… If I had not used Robinhood, I would not even know how to trade options. When I look at Fidelity for buying options, it’s like, ‘Okay, this is way too complicated.’ I would just be like, ‘You know what? Forget about it. I’ll just buy the shares.’”
As another #retail #investor in Ackman’s SPAC puts it, “People are doing this stuff en masse with less #sophistication these days. The #technology’s sophisticated, but the people on the other side of it are less sophisticated.”
And that world has little room for #big #errors.
As hefty as the psychiatrist’s losses were, they were not as disastrous as those of a 39-year-old software engineer who had saved $1.6 million over 20 years — ever since he began working at the age of 18…
Top Digital CEOs-CxOs Network: Global Risk Management Network LLC: We Create the Digital Future™: AI-ML-Cyber-Crypto-Quantum-Risk-Computing: MIT-Princeton AI-FinTech-Quant-Cyber-Crypto-Quantum SME: https://lnkd.in/esk8PEp:
