Are Special Purpose Acquisition Companies or SPACs the Next Bubble?


It seems like every other year, investors become infatuated with some type of new investment that starts off strong but ends up going bust.

There was the Dotcom bubble with internet companies in the late 1990s. Next, it was residential real estate in the mid-2000s. More recently cryptocurrencies and pot stocks were all the rage but were eventually met with a humbling crash. Every time it ends the same way, with investors rushing blindly in to get rich on profits they see others making, only to come out disappointed because they didn’t take the time to do their homework.

What are SPACs?

Let me introduce the newest craze, the so-called blank check companies also known as the special purpose acquisition companies or SPACs. To validate the idea, investors are all-in on this new investment, a new exchange-traded fund.

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The Defiance NextGen SPAC Derived ETF now offers one-trade access to would-be SPAC investors. It tracks all kinds of big-name figures who are launching SPACs to cash in on the trend. Among them are hedge fund billionaire Bill Ackman, former U.S. Speaker of the House Paul Ryan, and Oakland A’s executive Billy Beane.