Do you know the hottest Buzzwords in Wall Street? What's SPAC? Can I own Cannabis companies?
Have you ever heard of SPACs, what does EV stocks entail, do you know that you can own Cannabis-related stocks?
Today we are going to shift gears and talk about investing in the US stock market. With the recent US elections, everybody knows that there will be a polarising shift in how US is going to operate come January 2021. As a result, certain sectors of the US economy are going to benefit from this.
SPAC stocks - Private companies IPO indirectly
EV-Stocks - Electric cars and everything that makes it
Cannabis Stocks - The new tobacco?
I am going to explain to you which sectors to look out for and why. I will not however be advising which stocks to buy so please do your own due diligence.
From January to October 2020, a record number of 165 SPACs were listed, according to Refinitiv. Which also has seen a lot of interest by traders and investors alike. But what are SPACs exactly?
They are what people would call 'shell companies'. But it isn't for tax-evasion purposes. They are formed just so that they can raise more money through an IPO. After they have enough money, they will then acquire a private company that they decide on. Take note that during IPO, SPACs usually do not tell the public what company they intend to acquire.
You might ask "What happens if they didn't acquire any company in the end? What will happen to my money?" Typically, after 2 years, if nothing happens, they will return investors the amount of the IPO Price, not your invested amount.
Why is it hot? Because SPACs is a quicker way for private companies to raise money as compared to the traditional IPO, especially during this COVID period. And in recent times, high-profile people like Richard Branson and Bill Ackman have created their own SPACs.
Essentially, investing in SPACs is like opening a mystery box. When you own that SPAC and it acquires a company, the prices would either rocket or fall because it is like that acquired company has IPOed.
You would have already figured out that most of the hottest stocks now is based on the US election. Joe Biden has said that he wants to build 500,000 charging stations. That's why people are more optimistic about electric vehicles, but other than car manufacutrers, there are many other types of company that have benefitted from this. Besides EV companies, battery makers, and rare materials company have seen growing interest in their stocks.
Disclaimer: I am neither supportive nor against recreational Cannabis use...
Source: New York Times
Side question: Does anyone know why the growers have to wear like this?
You might have seen this news recently, which Singapore condems, but you might not have seen this news.
Source: NBC News
As you can see, the democrats are in full support for the use of Cannabis, depending on how the senate is going to swing, Cannabis might be legalised soon, but this uncertainty has not stopped investors from investing in Cannabis companies. But because producing and selling Cannabis is still illegal, some direct producers' stocks can only be bought over the counter (OTC). But if you are looking for a , there are certain companies that owns properties that growers work on.
And that's it! I hope this article can help you get more insights into the US stock market. Please do read up on articles written by other analyst and make your own decision.
Side discussion: it is noted that minister said companies pushing for legalisation because of profits. but why does singapore allow cannabis companies to set up here?
Hi Woo, I believe we could use the casino analogy with respect to this. Singapore wants to earn money from the outside but does not want any of it's residents to consume it. Since CannAcubed only sets up an office here, great for tax collection for the SG government