Thread by @spacanpanman

Something an old boss told me once when I first started public investing and lost a lot of money on a position: "If you're not losing money somewhere in the portfolio, you're not taking enough risk." #spacs #spacsquad

2/ If you’re sweating every tick up or down in a position, you’re TOO BIG. #spacs #spacsquad

3/ SPAC asymmetry with $10 pre-merger floor is your best friend. A 30% move from $10 -> $13 is FAR superior than $45 -> $60. Risking $0 to make $3 way better than risking $35 to make $15. Always be cognizant of risk/reward. #spacs #spacsquad

4/ SPACs are event-driven trades rich in catalysts before merger closing. SPACs post merger become fundamental investments dependent on very different parameters (earnings, research coverage, lockup expiry, etc). Know the difference and adjust risk accordingly. #spacs #SpacSquad

5/ Ability to take advantage of SPAC asymmetry and event-driven catalysts coupled with COMPOUNDING is very powerful. Making 15-50% a trade and recycling that capital 4-8x a year is how you make outsized, unparalleled risk adjusted returns. #spacs #SpacSquad

6/ Never FOMO or regret missed trades. Your mental state is the most important thing when it comes to making trading decisions. Especially in this environment, there's always another new SPAC situation around the corner. #spacs #spacsquad

7/ Sizing? When you're in a SPAC near $10 floor (predeal or announced) that you like, SIZE THE F UP. You'll never have a better risk/reward. As the situation trades higher, your only move is to trim/sell. Never buy as it moves up. #spacs #spacsquad

8/ Hard to trim/sell as it moves up? You're a renter, not an owner of SPACs. Never fall in love with winners or marry a loser. Trim/sell your winners and it's ok to lock in a loss. Locking in losses can be a clearing event for your mind to get right footed. #spacs #spacsquad

9/ Concerned about record market valuations? Asymmetry of SPACS has you covered. When a market correction eventually does come, that pre-merger hard floor of $10 will be your best friend. You may experience a 10-20% drawdown, but if ur doing it right it'll be from a monster ATH.

10/ Another beautiful thing about SPACs is that you can use ones near $10 as cash alternatives that feature upside optionality. If there is a market correction, it's nice to be able to sell low price SPACs to take advantage of those dislocations. #spacs #SpacSquad

11/ NEVER be fully invested on margin. If you're using margin w/ SPACs, that's just being greedy and taking on unneeded risk. Maintain some margin/cash/low price SPACs as a credit line ready for times of dislocation. Sep/Oct 2020, GME-driven HF unwind, etc. #spacs #spacsquad

12/ In 2008/2009 several hedge funds ran large SPAC books on margin and when the liquidity crisis hit, they had to offload them at big discounts. RH raised margin requirements on SPACs in Sep 2020 causing a huge retail unwind. Be positioned to take advantage! #spac #spacsquad

13/ RISK MANAGEMENT: SPACs as an asset class are HIGHLY correlated. They all move together since the same hedge funds, retail investors, etc. all own some combination of the same names. There will be times of deleveraging / risk off, which is why point #11 is important!