The SPAC Slaughter | Podcast Episode #159

0:00
Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market. And today’s episode is about the Sack slaughter. Got an email from a guy. We’re gonna call him Rufus today. Because Rufus is getting destroyed by the Sacks.

0:16
His email is pretty short and sweet. It’s right to the point and there’s a little bit of desperation in it. He’s been caught off guard by the recent selling. He writes, The Sack slaughter, which is also the title of this podcast. He says, I fell for all the stupid specs. And I sold half of my positions to minimize my losses.

0:35
I still have confidence in CCIV, but is there any hope for the rest of them to come back around so I can almost break even? How did I not see this coming? Thanks. And Buffalo Trace is the who who, not gonna say it on the podcast, I wanna keep it PG.

0:53
Any case, Rufus here, he’s got his hopes in CCIV and apparently he has it and a lot of other specs too, some of which he’s already lost hope and sold. And the bourbon of choice. It’s called Georgia Bourbon whiskey. Past week, I went to Blue Ridge Mountains and went to a couple of distilleries and picked up a couple of bourbons that I know I’m not gonna be able to find at any of these local liquor stores down here in Florida.

1:17
So pick me up some and uh excited to try some of these out. Now this Georgia bourbon whiskey, it just lacks. A lot of depth. I mean, it just doesn’t really take me anywhere. It comes in really hot, but there’s not a lot of flavor to that hotness. Kind of what I would imagine if a couple of friends got together and said, hey, let’s, let’s try to make some bourbon without really much experience, you make it and this is what you got.

1:40
I give it a 38. I just don’t think it’s that good. I definitely don’t plan on restocking this on my shelves anytime soon. So George Bourbon whiskey, 3.8. Which is at least still higher than some of the stock prices of the specs that are in Rufus’s portfolio.

1:57
Well, let’s, let’s tackle these questions that he has one at a time. And there’s a lot of emotion in his email, and you could tell that right out of the gate, he’s in the stage of hoping this stuff comes back, that he doesn’t lose his money and he doesn’t lose his shirt. For those wondering what is a back? It’s a special purpose acquisition company.

2:14
And they’re basically called blank check companies. They are publicly traded as a shell company with the purpose of acquiring other private companies. So these specs, they go up in value based off the companies they acquire because they’re taking these companies kind of like indirectly public.

2:29
It’d be like if a spec was formed and They went and acquired Chick fil A. Now, Chick fil A is not publicly trading, but they are technically trading under this back. And you don’t even have to take Chick fil A public because they’re wrapped underneath the shell company that’s currently being traded.

2:46
It’s kind of crazy. It’s kind of stupid, really, honestly. If you ask me, I haven’t traded a single one of these things. I have no confidence in them. I think they’re stupid. It reminds me of the 90s. The 90s, you had the dot-coms. Website launched the dotcom. It’s kind of like today if a company goes and starts accepting Bitcoin, everybody loses their minds over it, or they start mining for Bitcoin.

3:07
There were some stocks that did that a couple of years back. Every time a company that was starting to fail like Kodak, they would say, hey, we’re gonna start mining for Bitcoin and the stock would go through the roof. It’s kind of like that now with Sacks. I mean, you get a new spec, everybody wants to get in on it. They don’t even know what they’re gonna buy and they’ll get in on it, right?

3:23
CCIV has been the big one. That’s the one that everybody. He’s talking about. And this thing has gone from trading at like $10 a share for the longest time going back to September of last year. And then out of nowhere it just goes from like $10 all the way up to $64.65 dollars a share.

3:38
And again, these things remind me exactly of the dot-com bubbles because there are so many stocks that were trading during the dot-com bubble in the late 90s that literally had no value at all. They’re running their show out of their mama’s basement. I mean, there just wasn’t no value at all.

3:53
And yet these things were worth hundreds of millions of dollars. It was just nuts at that time, and I see the specs the same way. And I remember going to a Super Bowl party this past year and I was at a friend’s house and he had some kids that had their friends over, right? And I was talking to some of them and they were telling me about the stocks that they were trading.

4:11
And they’re like, yeah, I’m in CCIV. I got in at like $45 a share, and I was like, oh, you’re in that too. And he says, yeah, yeah. I’m gonna make some massive amounts of money. This thing’s going triple digits in no time. And I said, what makes you say that? It’s like, well, my girlfriend’s dad is really into this stuff.

4:27
He follows it every day. And then he told me how he works at like Harris Corporation, which is now L3 Harris, and so he was ready to quit his job and become a day trader, just like they did back in the 90s too. And it was at that point where I knew this, this thing is done. The specs are gonna just puke all over everybody.

4:44
And I’ve never touched one and never had a desire. I don’t even track them because I don’t care about them. But I get this email and I’m seeing the blood in the streets from this guy and I feel bad. But it’s not just CCIV he’s in. He’s already sold half of his positions in the backs to minimize his losses.

5:00
But he also talks about how he’s hoping that the others will come back around to become break even for him. I’m thinking how many spacks is this guy in? But that’s, that’s another problem right there. He so badly wants to get rich off of these things that he’s putting everything into one sector and one industry. And that’s not good.

5:16
You can’t do that stuff. No matter how bad I believe in tech or how much I believe in a particular stock or a particular industry, whether it’s energy or industrials. I’m not putting all my money in there, no. Maybe I’ll have a, a slant towards that sector or that industry, but I’m not putting 50 or 60 or 100% into that sector, not.

5:35
Chance, especially not the stock. But here you go. You got Rufus here. He’s just plowing all his money right into these specs and now he’s getting his head handed to him. And I expect a lot of these specs one day will be worthless. I’m not saying all of them will be, but I think there’s gonna be a large chunk of them that go worthless, and we’ll be talking one day people were trading specs.

5:55
They weren’t even a real company. That’s what we’re saying today about the dot-coms. But CCIV, I think this is ultimately a pump and dump. In fact, it’s already played out as a pump and dump. Goes from 10, goes up to like $60 almost $70 a share, and now it’s trading at $2256 as of this podcast.

6:11
Yeah, that’s pretty much a pump and dump. Also goes to say too, you get caught in one of these and dumps and whether or not it was a stupid trade from the get-go or not, start taking some profits along the way. If you’re in CCIV and I’ve talked about this in another podcast, there’s ample opportunity to raise the stop loss and get out at a decent price and capturing most of the gain.

6:31
And why does he still have confidence in CCIV? Does CCIV show us anything that says, hey, a good reason to be bullish on the stock right now. No, I mean, it goes from 65 down to 22. There’s, there’s a loss of faith right there by the public and the stock. If there was something of value in it, people would already be buying it up.

6:49
In fact, it tried to bounce at one point at $20. It goes right back up to 32 $33 a share, and now it’s right back down to $22. Look, who knows? Maybe, maybe something miraculous happens in the stock. Maybe they acquired Chick fil A, who knows, right?

7:04
And again, they’re not acquiring Chick fil A. But if they did, I’d be buying that. I love some Chick fil A. I had it last night. But he’s in it for all the wrong reasons. He’s putting his confidence in a stock. Don’t put confidence in the stock. Put it in the charts. Follow the charts, follow where the charts are taking you. Always playing out the trade because you got to expect that things like what you’re seeing in CCIV will happen to any trade that you possibly get into.

7:25
I was stopped out of a stock today SQ square, right? Definitely not at CCIV. I got long. I got stopped out at 2:19. By the end of the day, this thing was trading at 213. You wanna know something? I saved myself about 3% of additional heartache that I didn’t have to take because I followed my trade.

7:41
That was my stop loss before I ever got into the trade. And I don’t know if this is a good segue because I’m talking about a losing trade, but I actually have a really good membership that goes along with this podcast called swingtradingthestockmarket.com. You go to the website and it has different levels that you can subscribe to.

7:58
And with it, you’re going to get all of my research that I do all week long in the stock market. That’s gonna be the most intriguing charts that I come across each and every day. As well as my watchlists updated multiple times each week and daily trade setups and all the stocks that I’m watching each day for potential long and short positions.

8:18
I’m also gonna update the Fang stocks. I’m gonna update Microsoft. I’m gonna update Tesla for you each week, as well as multiple updates of the S&P 500, the Nasdaq 100, and the Russell 2000 so that you’re always in the know with where the market’s going and where it’s been. Check it out, swingtradingthestockmarket.com.

8:35
Now, Rufus is engaged in the fallacy of break even, not managing losses, break even. Typically, you start getting into, well, if I can just break even, I will get out of the trade. And why, why is he saying that? Cause he’s taking some steep, steep losses. But also people like to do when they start taking steep losses is doubling and tripling down to lower their price basis.

8:55
That’s another big, big, no, no. Yes, sometimes it may work for you, but when it doesn’t, you’re Rude, man. Big time. You’re gonna be taking double or triple the the losses than if you would have just stayed in your original position. And I also find it interesting too. It’s like, oh, well, I’m gonna double it down because I believe in the stock.

9:11
Well, if you believe in the stock, you don’t need to double it down because it’s gonna come back and be profitable for you anyways at your original cost. Just doesn’t make any sense. Instead, you’re doubling down because you’re just wanting to get out at a lower price because you can lower your cost basis on the stock so you can get out at a lower price.

9:26
Doesn’t sound like you have all that much confidence. You’re just fooling yourself. But look, when the, the chart tells you, hey, this, this stock is broken, CCIV is broken. Maybe it bounces, it’s gonna bounce at some point, but I don’t think it’s gonna go back up to these 40s or 50s or 60s. I could be wrong. Weirder things have happened this year, like GameStop.

9:43
But if I’m just judging it based off the chart, I have no reason to believe that it’s going back up anytime soon, like, like what we saw back in January. So at that point, it becomes, hey, I want to preserve my existing capital and do a better job of managing the risk on my future trades where I’m actually mapping out, where am I going to get out if this trade goes wrong?

10:02
Because if you don’t do that before you get into the trade, it’s going to be very hard to do it once you get into it. We have a tendency to get very comfortable with losing stocks as they start losing in value. We just kind of like sit around hoping that it’s gonna come back. I mean, I don’t know. I don’t know where all this hope and optimism comes about from losing stocks.

10:19
But for me, once it starts losing and it crosses that line in the sand for me, I’m out. I’m not gonna give it a benefit of doubt that it’ll come back. I’m definitely not gonna double down. So you got to break away from that idea of, I need to break even on a stock because it also goes back to the ego of I’ve got to win on this trade.

10:35
Instead of accepting the fact that as a trader, you’re going to have a lot of losing trades over the course of your lifetime. The longer you trade, the more losses you’re gonna have. I’ve had losses a lot of late, not devastating losses, but it’s a very, very difficult market situation right now where it’s very choppy.

10:50
So I’m trading less right now, but nonetheless, there are some losses here and there that I’m having to take on. There’s also some winners too. And then I’m gonna wrap it up with this final comment from him. He says, how did I not see this coming? He didn’t see it coming because he got caught up in the hype. He got caught up in the fear of missing out.

11:06
The hype is so real with these things, with Sacks, with Bitcoin, with stocks in general, with GameStop, with AMC. People 34 months ago couldn’t have cared less about GameStop, couldn’t have cared less about AMC. But when everybody else got caught up in it, they got caught up in the hype as well. And then they get in like a GameStop at $300 a share and it comes.

11:25
Back down to 100. How did I not see this happening? Because you wanted to believe that it wasn’t going to happen. You didn’t want to believe that it could screw you over, that it could destroy you. You can believe some pretty ignorant things when you got your capital involved. Oh, it’ll come back, it’ll come back. Oh, I’m gonna hold it for a long-term investment.

11:41
Man, you never had any desire to hold that stock as a long-term investment in the beginning. You only did it because you feel like the markets. For in your hand and you’re trying to stroke your ego by saying, hey, I’m gonna make it a long-term investment. Don’t do that stuff. The reason why you don’t see these big sell-offs happening is because you never planned out your trade, because you never placed your stop losses before you ever got into the trade.

12:01
You can’t buy into the hype. You got to know that if you’re gonna see a wild ride higher, it’s gonna have a wild ride back lower. And I think you’re gonna see more and more stocks that have had these epic runs off of the. March lows. They’re going to eventually see some crazy pullbacks, 50, 60% just because it’s not sustainable and it’s not gonna be sustainable in

12:21
GameStop or any of these other stocks. And if you’re putting your hope that something like CCIV is gonna come back, you’re kidding yourself. You’re not trading according to a plan. You’re not being a savvy investor or a trader, you’re just hoping. That’s gonna do it for today’s episode. If you have any questions, feel free to email me, ryan@shareplanner.com. I love getting your emails.

12:37
I try to use as many of them as possible in these podcast episodes. And make sure to put a 5-star review out for me. If you can, you can do that on your platform that you’re listening to me on. If it’s Apple, that’s the best one. If it’s uh some other platforms, see if they offer a review opportunity.

12:54
If they do, make sure to leave me a review on that as well, as well as subscribe because you’ll be alerted every time I drop a new episode on this podcast. Thank you guys, and God bless.