What is a SPAC?!

A Special Purpose Acquisition Company (SPAC) is a company set up by investors (SPAC sponsors) with the sole purpose of raising money through an initial public offering (IPO) to acquire another company. In short, a SPAC has the “special purpose” of solely raising money to “acquire” another company, but does not make any products or sell anything itself.

Rather than go through the very long traditional IPO process with the SEC (up to half a year), a SPAC offers an alternative of going “public” within months by offering low price shares. These shares are offered to other investors to raise the capital necessary to acquire a private company to merge with the SPAC. Sponsors are betting on this acquisition to increase the value of shares for the newly combined entity–thus making a profit for investors and sponsors alike.

In return, investors in SPAC’s have the ability to earn interest on their money through what is called a “trust account” which is held by the SPAC. Their dollars will accrue to acquire a target private company within the span of two years. When the target private company is finally acquired by the SPAC, investors may choose to sell their shares in return for the interest earned in the trust account, plus their original investment. Or, investors can continue to hold their shares of the newly combined entity at their new market value. However, if a company is not acquired within the specified time frame, the SPAC itself is liquidated, and investors have their money returned along with the interest earned from the trust account.

Key Considerations:

  • Who are the SPAC Sponsors? Management expertise is critical.
  • What is the target company selected for acquisition? The target company is often unknown until selection and/or after an initial “IPO” investment.
  • What is your appetite for risk as an investor? SPAC’s tend to be higher risk investments for all the reasons mentioned above. 

An Introduction to Investing Terminology

Wizest was built to empower anyone to invest like a financial expert–through financial experts! Nevertheless, many of our users want to learn about the world of finance for themselves. Therefore, we’ve compiled this cheat sheet of finance and investing terminology. You may see them appear in the posts and bios of our Wizest experts. (When you’re ready, check out these books and podcasts to learn more!) 

Stock – An ownership piece of a company that can be bought and sold. 

Bond – A piece of debt, usually of a company or country, that can be bought, sold, or held until a certain point in time (i.e. the maturity date).

Security – The group term to refer to both stocks and bonds (and sometimes other less common financial goods too). 

Earnings report – Regular updates released by companies that include information like income and sales.

Dividend – A payment made to people who own the stock of a company, typically each quarter. The amount varies by company and stock type.

Mutual fund – Groups of people pooling their money together for experts to buy stocks and other securities. Can be bought similarly to a stock, but sometimes at a particular minimum or particular time.

Index or stock market index – A collection of important stocks that represent something about the overall stock market.

ETF or exchange-traded fund – Similar to a mutual fund, but instead these are bought and sold just as easily as stocks.

Hedge fund – Similar to a mutual fund, but typically buying more complex financial goods and using more complicated investing strategies.

Financial advisor – A trained professional that has passed exams from the Financial Industry Regulatory Authority (FINRA) allowing them to provide financial advice.

Financial analyst – Someone who examines financial data to find good deals for buying and selling.

Financial planner – Similar to a financial advisor, but focusing more broadly on personal financial goals, not just investments.

Commodity – Large quantities of goods that can be bought and sold, like sugar, oil, and gold. 

AUM or assets under management – The total amount of money that investors have given to a financial expert or fund.

Money market fund – Similar to a mutual fund, but focusing on extremely low-risk financial goods, like very stable government bonds. 

Short-term capital gains – Profit made from the buying and selling of something in less than one year. Importantly, these are taxed just like regular income.

Long-term capital gains – Profit made from the buying and selling of something across more than one year. These are typically taxed less than regular income or short-term capital gains.

Our Favorite Podcasts for Learning Finance​

Swamped by the ever-growing list of new podcasts? How do you know what you’ll get searching “money,” “finance,” or, “investing,” on Spotify? Wizest has surveyed the landscape on your behalf, choosing our six favorite podcasts, each with a particular goal that our investors tend to have in mind.
 
 
Best for Daily News: Wall Street Journal’s What’s News
 
Quick and high-level, WSJ is currently outperforming all the rest with these reliable episodes averaging just fifteen minutes. Great for commuting with both morning and evening editions.
 
 
Best for Personal Finance: So Money
 
Don’t want to read the same personal finance gurus as mom and dad? Look no further. Farnoosh Torabi is bringing a much needed, diverse, and female-led facelift to a space long dominated by figures like Dave Ramsey. Practical financial advice on buying a house, buying versus leasing a new car, and special interviews dedicated to women’s and minority issues.
 
 
Best for Young Professionals: Millennial Investing – The Investor’s Podcast Network
 
Deep dive episodes into all the new ideas which differentiate the next generation of investing from the last one. Expert interviews on topics like cryptocurrency, investing psychology, student loans, and much more.
 
 
Best for Fintech and Startups: Breaking Banks with Brett King
 
More than ever, technology is mediating the way that we interact with our finances. New banking, trading, and finance apps are emerging daily. (Wizest included!) This podcast will keep you primed on everything tech and trending.
 
 
Best for Growing Expertise: We Study Billionaires – The Investor’s Podcast Network
 
This outlet landed on our list for a second time with a shockingly entertaining show that began like a book club: the two co-hosts reading about some of the most successful investors and entrepreneurs of all-time, then summarizing the lessons learned. Today, We Study Billionaires regularly features some of the titans that their hosts initially profiled.
 
 
Best for In-Depth Analysis: Bloomberg Masters in Business
 
Know your way around plenty of financial jargon? (If not, check out our primer.) Bloomberg Masters in Business offers competing perspectives on investing, often with timely analysis, from the movers and shakers behind today’s markets. If you’re advancing as a student of finance or are already an expert with Wizest, this show shares focused commentary from your peers.
 

A List of Great Investing Books, Organized by Skill Level (Part 1–Learn)​

 
Never liked the look of finance textbooks or the business section at Barnes and Noble? Picking the right reads for your investing journey can be intimidating just like picking stocks and bonds. Here Wizest has compiled a list of all-time favorites among investing professionals, organized by skill level. (If podcasts are more your thing, no worries! We’ve got you covered.)

The Little Book that Beats the Market by Joel Greenblatt

Here in a brief and approachable book, the legendary founder of hedge fund Gotham Capital, Joel Greenblatt, explains a philosophy for just about anyone to earn superior investment returns. Greenblatt has a gift for simplifying and teaching real finance using everyday examples that anyone can grasp. The book begins with a story about selling chewing gum in elementary school and ends with a disciplined formula for selecting, buying, and selling a stock portfolio.

The Education of a Value Investor by Guy Spier

Part biography, part self-help book, and part investment strategy, follow the author, Guy Spier, as he achieves financial enlightenment. After a privileged education, including a degree from Oxford, Spier begins his career like many other sharks on Wall Street. Then, a chance encounter with “value investing” teaches Spier to focus on the big picture, to avoid chasing overnight returns, and to balance his portfolio with a better quality of life–earning better returns in the process. 

More Money than God by Sebastian Mallaby

For those who are interested in the Wild West of high finance, Mallaby has crafted a masterful history of the hedge fund industry. If you never thought that you could be intrigued by complex financial instruments, let Mallaby put your assumptions to the test. The author explains how the creativity, ambition, and greed of a handful of enterprising individuals has shaped modern economic history. From speculating on cocoa and frozen orange juice, to clandestine meetings with government officials in developing countries, Mallaby explains the colorful reality behind high-stakes investing.

 

Enjoy this list? Come back for Part 2–Advance! We’ll be posting soon.

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