Calling a timeout

Welcome to “Not Pretty, Not Rich,” a newsletter about money, the economy, and doing things the hard way.

It’s Friday, April 2, 2021, and there isn’t much to the newsletter this week. In fact, I’m putting it on hiatus for a little bit. In short, my daily workload has grown, and I’ll need to reassess how the newsletter fits into it. It’ll be back before long, but I do want it to return bigger and better than ever. So, it may be a couple of weeks or a couple of months, but for now, I’m calling a timeout.

In the meantime, I’ll share some links as I usually do. See you soon.

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  • 56%: The share of Americans that think the stock market is rigged. (Axios)

  • 3,000: Tons of garbage picked up in Portland, Oregon, in 2020. An increase of 50% from 2019, as we apparently turned into trash machines during the pandemic. (TIME)

  • 1,200: The number of years Japan has been keeping track of its annual cherry blossom bloom. And this year, they bloomed earlier than ever, which isn’t really a good sign. (Washington Post)

  • Teaching A.I. and algorithms to set prices ethically — imagine explaining this concept to someone 150 years ago. (Harvard Business Review)

  • Cannabis can be roughly as addictive as opioids for users between 12 and 17. I’m all for legalization, but yeah — kids shouldn’t be using this stuff. (JAMA Pediatrics)

  • Speaking of marijuana legalization, New York FINALLY took the leap, and New Mexico appears to be hot on its heels.

  • A look back at the “Satanic Panic” that gripped the nation during the 1980s. A lot of this stuff is remarkably similar to some of the current conspiracy theories gripping certain segments of our population. (The New York Times)

  • In the most unsurprising surprising news of the week, some companies apparently hire unethical bosses on purpose. (U. of Maryland)

  • A long read, but worth it: The story of how an American container ship was sunk by Hurricane Joaquin in 2015, killing 33 people. (Vanity Fair)

  • Living like a nomad can be expensive, and hard work. (The New Republic)

  • We’re squeezing out farmers. (Modern Farmer)

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“Not Pretty, Not Rich” is a newsletter about money, the economy, and doing things the hard way, written by me, Sam Becker. You can connect with me through my website, Twitter, LinkedIn, or send me an email at Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.

And remember, the contents of this newsletter are not meant to be taken as advice. It’s for informational and entertainment purposes only.

Evasive Maneuvers

Welcome to “Not Pretty, Not Rich,” a newsletter about money, the economy, and doing things the hard way.

It’s Friday, March 26, 2021, and here’s this week’s rundown:

  • In the news: Biden goes big

  • Taxes: Evasive maneuvers

  • Research: CEOs play a deadly game

  • Numbers and links:

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Biden goes big

There’s a huge infrastructure bill in the works that could bring about some big changes.

What’s going on: Biden’s going big as the administration is reportedly planning a $3 trillion infrastructure plan. It has yet to be unveiled yet, so we don’t know exactly what will be in it, but looks to include money for a whole lot of (desperately needed) things:

  • Rural broadband expansion

  • Worker training programs

  • Road, bridge, port, etc. construction

  • Green transit systems

  • Money to combat climate change (whatever that means)

…and a whole lot more. Again, we won’t know what is in the plan until it’s official unveiled. Then, the question is whether or not it can gain bipartisan support in Congress.

My take: We need a bill like this — our infrastructure is crumbling, and we need a huge reinvestment to get things in working order. There’s really no getting around it. Many of our dams, bridges, and roads were built decades, if not generations ago, and need to be fixed or replaced.

Yes, it’s expensive, but it’s also a chance to create jobs and bring needed technology (renewable energy, broadband, etc.) especially to rural areas that could use the investment.

It’s only a matter of time before another bridge collapses, or a dam collapses. And since we have a backlog of work that needs to be done, we may as well do it before it gets even more expensive. Or before a dam fails somewhere.

Evasive maneuvers

What’s the secret to tax avoidance?

If you can dodge a wrench, you can dodge a tax: A new analysis suggests that wealthy Americans are dodging taxes — and remarkably well. From The Wall Street Journal:

The top sliver of high-income Americans dodge significantly more in income taxes than the Internal Revenue Service’s methods had previously assumed, according to forthcoming estimates from IRS researchers and academic economists.

Overall, the paper estimates that the top 1% of households fail to report about 21% of their income, with 6 percentage points of that due to sophisticated strategies that random audits don’t detect. For the top 0.1%, unreported income may be nearly twice as large as conventional IRS methodologies would suggest, the researchers wrote.

How’s it happening? Mostly because businesses (or business entities used mostly by the wealthy) don’t report income — something individuals can’t really get away with because of the W-2 system. The government knows what you and I make because our employers tell them, in other words, but there isn’t really a verification system outside of that.

So, that leads to offshore businesses, shell companies, pass-through entities, and a whole bunch of other measures that are deployed mostly by the wealthy, and mostly for the purpose of tax avoidance. And it works like a goddamned charm, evidently.

As for a remedy, the New York Times Editorial Board published an op-ed in response to the analysis, proposing that the government adopt a plan proposed by Charles Rossotti, who led the I.R.S. in the late 90s and early 2000s. In short, it would create a third-party verification system for business income.

That’s all dandy, but the takeaway here is clear: There are different rules. I know that my wife and I pay an awful lot in taxes — much more than, say, $750. And I don’t even mind all that much; I consider taxes to be sort of a “subscription” payment to my state and country. Obviously, if the subscription cost less, that’d be great. But the tools that some of these people are using to avoid all these taxes are not within my reach — or within reach for most anybody else.

But the system can be gamed, and quite well, apparently. If only we, collectively, spent more effort trying to solve real problems rather than trying to lower our tax burdens, we could make some headway against some of the more serious issues facing the country.

CEOs’ jobs are killing them

Being the boss takes its toll, according to new research.

What the science people say: In another piece of interesting research, a new NBER working paper finds that the stresses of being a CEO have a measurable effect on mortality. Specifically, CEOs in competitive industries may be working jobs that are literally killing them — shaving around 1.5 years off of their average lifespans. The trend works in reverse, too.

Here’s the abstract:

We estimate the long-term effects of experiencing high levels of job demands on the mortality and aging of CEOs. The estimation exploits variation in takeover protection and industry crises. First, using hand-collected data on the dates of birth and death for 1,605 CEOs of large, publicly-listed U.S. firms, we estimate the resulting changes in mortality. The hazard estimates indicate that CEOs’ lifespan increases by two years when insulated from market discipline via anti-takeover laws, and decreases by 1.5 years in response to an industry-wide downturn. Second, we apply neural-network based machine-learning techniques to assess visible signs of aging in pictures of CEOs. We estimate that exposure to a distress shock during the Great Recession increases CEOs’ apparent age by one year over the next decade. Our findings imply significant health costs of managerial stress, also relative to known health risks.

Being a CEO obviously has its upsides, but it’s a job with some life-altering stress. With that in mind, maybe a career washing dishes has its upsides? Right, Jack?

Numbers and links

  • Finally, R.I.P. to Jessica Walter who died yesterday at age 80, and who played perhaps my favorite TV character of all time, Lucille Bluth:

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“Not Pretty, Not Rich” is a newsletter about money, the economy, and doing things the hard way, written by me, Sam Becker. You can connect with me through my website, Twitter, LinkedIn, or send me an email at Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.

And remember, the contents of this newsletter are not meant to be taken as advice. It’s informational and entertainment only.

From $30,000 to $20: A phantastic ending to my pharmacy woes

Welcome to “Not Pretty, Not Rich,” a newsletter about money, the economy, and doing things the hard way.

It’s Friday, March 19, 2021, and here’s this week’s rundown:

  • Good news: Household net worth hits a high

  • Other news: Tax raises?

  • Follow-up: Concluding my fight with Walgreens

  • Numbers and links

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We rich.

Americans’ household net worth just hit record levels: $130.2 trillion.

Who would’ve thought that after an economy-crashing pandemic, the sacking of the U.S. Capitol, and all of the other fun and exciting events of 2020 that Americans would be beaming over their net worth? It’s a surprise, to be sure, but a welcome one.

From The Wall Street Journal:

Household net worth—the difference between assets and liabilities—ended the fourth quarter at $130.2 trillion, the Federal Reserve said Thursday. That was up 5.6% from the third quarter and 10% from the end of 2019.

The gains came as financial assets—particularly corporate equities and mutual-fund shares—rose steadily after the first quarter of 2020, when markets suffered a sharp drop. The S&P 500 stock index rose 12% in the fourth quarter and 16% for the full year, propped up by extraordinary stimulus actions from Congress and the Fed.

So, there you have it: Most of that increase in wealth is the result of stock prices going up. And stock prices went up because the government threw a whole lot of money at people. Rising real estate prices also helped, the report says.

Alas, if you don’t feel like you’re richer than ever, that’s why. But I’ll tell you what, my 11 shares of Goodyear Tires are up like 78%, so that’s pretty cool. Now, if I could only afford to buy a house…

Say it ain’t so, Joe!

President Biden is looking to raise taxes.

Why Joe, why?: As many expected, President Biden is looking to raise taxes, mostly on wealthy people, and in short order. If all goes according to plan, it would amount to the first significant tax increase in almost 30 years. With an expensive pandemic (hopefully) concluding soon, infrastructure crumbling around the country, and myriad other things to pay for, Biden’s looking to get some revenue going to help cover the costs.

The good news? Most people probably don’t need to worry much, as the tax hikes are mostly aimed at the wealthy. The plan would raise the top federal income tax rate to 39.6% for those earning more than $400,000. There would also be changes to capital gains taxes and estate taxes for the $1 million+ crowd.

Also, his plan would raise the corporate tax rate to 28%. You may remember that the Trump administration’s big tax-cut bill in 2017 cut the corporate rate to 21% from 36%, so even if this plan were to pass, corporations would still be better off than they were five years ago.

What’s next?: With the Democrats in control of the Senate, House, and White House, there’s a good chance that this plan, in one form or another, becomes law. While not every provision will make it through, it’s a pretty popular idea to tax the rich and to increase taxes on corporations, so the public is, largely, probably behind Biden on this.

And for all of the crazy culture war nonsense that we experienced during the election, this was really what many companies and people feared more than anything: A tax hike.

Again, though, the tax system is a mess, and there are plenty of loopholes to jump through. The IRS barely makes an effort to go after wealthy tax cheats anyway. And, as stated, corporations would be paying far less under this plan than they were under Obama or Bush Jr.

Of course, there’s a big battle to be fought over this in the coming months. But with mounting deficits, debt, and a lot of other problems, someone, at some point, was going to need to bite the bullet and try to raise taxes.

Just like President George H.W. Bush did way back in 1990, which ultimately cost him re-election.

My pharmacy fight, part II

Previously, I had written about how I was asked to pay $28,500 for a one-month supply of prescription medication. Here’s the end of the story.

Back in October, I shared with you all a story about a trip to Walgreens. I had been prescribed an extremely common medication for an extremely common and minor medical issue in August and had been unable to get my hands on it. At the time, the pharmacist told me that my insurance was refusing to cover the charge and that if I wanted to pay out of pocket, it would cost me $28,500.

Well, here we are, almost five months after that, and coming up on eight months since my original doctor’s visit. And after some back and forth between me, my doctor, and the insurance company, I was able to walk into that same Walgreens (shout out to the kind folks at the Dobbs Ferry Walgreens for putting up with me), plunk down a crisp Andrew Jackson, and walk out with the medication.

That’s right, after all that, I only ended up paying $20, while my insurance, apparently, was on the hook for nearly $30,000:

Everything about this is stupid. This is a one-month supply of this medication — what if this were a life-threatening problem? I’d be dead by now, because of some paper-pushers in Des Plaines or something.

Obviously, this is a largely inconsequential run-in with the machine that is our health care system, but let me tell you, it needs a serious overhaul. Charging $30,000 for medicine is like charging $750,000 for a used Toyota Tercel.

They’re basically making up the prices, because they know the insurance companies will be on the hook for it. Insurers, then, turn around and charge everyone higher premiums, and so on and so on, and before you know it, we all may as well be robbing pharmacies for inhalers and prescription-strength Tylenol.

Anyway, rant over. I got my medicine, but now I need a Xanax.

Numbers and links

  • 12: The number of twins being born per 1,000 births, the highest rate ever. (New Scientist)

  • 75,000: The approximate number of operators in SOCOM, the combined special forces of the U.S. military (Navy SEALS, Delta Force, etc.), which are operating in 80 countries. (The Atlantic)

  • Gasoline demand has peaked — and will probably never reach pre-pandemic levels again. (The Wall Street Journal)

  • Americans are buying too much stuff, and it’s clogged up the ports. (Axios)

  • Companies are betting on a big Vegas comeback this decade. (Bloomberg)

  • NFTs, sports cards, crypto… there are entirely too many things to throw money at right now. (New York Times)

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“Not Pretty, Not Rich” is a newsletter about money, the economy, and doing things the hard way, written by me, Sam Becker. You can connect with me through my website, Twitter, LinkedIn, or send me an email at Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.

And remember, the contents of this newsletter are not meant to be taken as advice. It’s informational and entertainment only.

Basic income, Warren Buffett likes choo-choos, and an NFT primer

Welcome to “Not Pretty, Not Rich,” a newsletter about money and the economy.

A quick note: No newsletter next week, so I’ll be back in two weeks.

It’s Friday, March 5, 2021, and here’s this week’s rundown:

  • In the news: A successful basic income experiment

  • Perspective: Warren Buffett’s annual letter

  • Feature: NFTs — the nifty new digital collectible

  • Numbers and links

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Basic income works, basically

A basic income experiment in California was a success.

What’s happening: Basic income — an idea that gives cash to people, no strings attached, in an attempt to help bolster the economy (here’s an explainer I wrote about it a while back) — has become a more popular concept in recent years. There are and have been numerous basic income experiments around the world, too, including one in Stockton, California.

Stockton’s program gave 125 randomly-selected people living in low-income neighborhoods $500 per month for two years. No tests, no work requirements — just $500 per month.

Now, we know what happened as a result: Basic income recipients in Stockton were more likely to find full-time jobs, and lead happier, healthier lives. That’s according to researchers Stacia Martin-West of the University of Tennessee and Amy Castro Baker of the University of Pennsylvania, as detailed by The Atlantic.

What’s it mean?: It’s kind of obvious on its face, but the results of the year-long study into Stockton’s program basically conclude that giving poor people more money is…helpful. These are people with few resources, and an extra $6,000 per year made a big difference for them.

As for how they spent the money? From the Washington Post: “Most of the money distributed was spent on food or other essentials. Tobacco or alcohol made up less than 1 percent of tracked purchases.”

In essence, Stockton’s program is just another form of welfare, of which we already have several existing programs in the U.S. But with housing, food, and education costs continuing to climb, and wage growth not keeping up, people are financially stretched, perhaps more than ever.

So, basically…: As mentioned, basic income was already an idea that’s gaining steam, especially as more and more people fall behind. The conclusions about Stockton’s program will give basic income proponents more ammunition.

These programs already exist in many forms, too, in certain areas. In Alaska, for example, residents get a check from the Alaska Permanent Fund. So, it’s not that crazy of a concept.

But should we expect some sort of national basic income program in the near future? I doubt it — we’re still sharply divided over increasing the minimum wage. Even so, Stockton’s program has provided some additional interesting insight into a controversial, but apparently effective, social program.

Warren Buffett’s annual letter

When Buffett speaks, people listen. So, what’s he saying?

Warren Buffett is a likable guy. He eats McDonald’s every day. He likes Coca-Cola. He lives in Nebraska — he’s your standard everyman, except that he’s also one of the richest dudes on Earth. He also interviewed to replace Michael Scott on “The Office”:

He got rich the most boring way imaginable: He invested a bunch of money and just sort of…let it grow. It worked out, obviously, and that’s why so many people’s ears perk up when he voices his thoughts on the markets.

He just released his annual letter, too, which he writes to the shareholders of his holding company, Berkshire Hathaway.

What’s Warren saying?: There’s a lot, as always, but Buffett did mention that he made some investing mistakes (paying too much for a manufacturing company, for example) and that most of Berkshire Hathaway’s value is concentrated in four companies, which he calls “family jewels.”

Here are a couple of other takeaways:

  • Don’t buy bonds: “Bonds are not the place to be.”

  • America rocks: “In its brief 232 years of existence, however, there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking.”

  • …railroads are cool?: “The history of American railroads is fascinating. After 150 years or so of frenzied construction, skullduggery, overbuilding, bankruptcies, reorganizations and mergers, the railroad industry finally emerged a few decades ago as mature and rationalized.”

Okay, that last one is nonsensical. But take a look at the letter if you want to get a feel for why so many people listen to Buffett so attentively.

NFTs: The nifty new thing everyone’s buying

They’re actually not nifty, and I don’t understand them. But they’re still the hot new commodity.

A few weeks back, I wrote about collectibles like sports cards, and how they’re having a renaissance as investments. Basically, people are buying up collectibles again, and paying top-dollar for them.

Well, there’s a new collectible in town, if you want to call it that. And they’re called NFT — non-fungible tokens.

NFTs?: Yes, NFTs.

They’re basically like digital trading cards. An NFT is a digital file, like a GIF, that people can own, trade, and sell. They’re all different, too, which separates them from cryptocurrencies (one Bitcoin is the same as another Bitcoin). Hence, “non-fungible.”

But similar to cryptocurrency, NFT ownership is recorded via blockchain.

Here’s a better explainer than I can put together.

The most popular NFTs are more or less the same as digital sports cards. NBA Top Shot NFTs are selling like hotcakes, and if you’re lucky, you can buy a pack for $9. But they’re sold out.

Just how much are they worth? A Lebron James NFT recently sold for $200,000. Lindsay Lohan is selling Daft Punk NFTs for $15,000. And NFT artwork is now being auctioned by Christie’s.

So, yes, they have some value. For now.

But..why?: I don’t know. I’ll admit that I don’t get it. But I suppose it’s the same as any other collectible — there’s hype, and that hype is translating to value, so people are climbing aboard.

Remember Beanie Babies? Same thing. NFTs are offering a way for people to make speculative bets and try to make some money. What else would we expect when people are bored, have money to burn, and when we’ve gamified everything to the point where it feels like innocent fun?

I mean, yeah, it’s mostly innocent fun. But just wait for the stories about how people spent thousands of dollars on a GIF and feel like they’ve been cheated.

My take: If it hasn’t come across yet, I don’t really know what to make of NFTs. As mentioned, they’re just another form of collectible, I suppose, and yeah, some people will probably make some money while they’re still popular.

It does make me wonder what the next commoditized collectible will be? Either way, I think I’ve finally turned into Roger Murtaugh and can’t keep up anymore.

Numbers and links

  • 18.3 million: Hours of chess people watched on Twitch via in January; is a giant (Protocol)

  • $25,000: The monthly fine facing 25 Colorado high schools if they don’t change their mascots from derogatory Native American symbols under a proposed state law. (Denver Post)

  • $250,000: The prize offered to anyone that can provide proof of their paranormal abilities. (OneZero)

  • 46%: Percentage of Wyoming’s land that’s owned by the federal government. State legislators are looking to claw it back. (Big Horn Radio Network)

  • 48 billion: The number of robocalls Americans are on pace to receive this year. (Fortune)

  • Beyond Meat looks like it’s coming to Pizza Hut, KFC, and McDonald’s (The Wall Street Journal)

  • Shoes are investments now. (Bloomberg Businessweek)

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“Not Pretty, Not Rich” is a newsletter about money, finance, and the economy, written by Sam Becker. You can connect with me through my website, Twitter, LinkedIn, or send me an email at Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.

And remember, the contents of this newsletter are not meant to be taken as advice. It’s informational and entertainment only.

How to invest in SPACs, and the VC model comes to MLB

Welcome to “Not Pretty, Not Rich,” a newsletter about money and the economy.

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It’s Friday, February 26, 2021, and here’s this week’s rundown:

  • In the news: Employers can’t find workers

  • Trends: Investing in professional athletes?

  • Feature: How to buy SPAC shares

  • Numbers and links

Employers can’t find workers

10 million more Americans were employed a year ago than they are now. But some employers say they simply can’t find workers.

What’s happening: A recent story from NPR chronicles the attempts of a Mr. Bill Martin, who runs a plastics manufacturing company in Georgia. Mr. Martin has run into an issue: He can’t find people to employ.

He needs workers. He just can’t find any. And apparently, he’s not alone.

Mr. Martin tells NPR he’s tried everything, including offering higher wages. The problem, the story says, is that job-seekers are looking for remote work. And a lot, if not most of the 6.6 million open jobs out there aren’t remote-friendly.

Go deeper: This isn’t really a new phenomenon. You can find similar headlines going back months. And I remember reading about this same issue in the years following the Great Recession. Of course, back then, there were other factors at play — a lot of it had to do with companies trying to hire people at relatively low pay levels, trying to continuously cash-in on workers’ desperation long after the economy had recovered.

But as of 2021, it’s a different situation.

There are employers that need workers, and there are people out there who aren’t working, and who would like to be. We can get an idea of just how many people by looking at a metric like the labor force participation rate.

Here’s a look at the labor force participation rate over the past year:

As we can see, the pandemic caused a steep drop-off. It improved a bit during the summer last year, but since then, has flatlined and even started to fall again. Here’s how it looks when we zoom out to a five-year window:

Clearly, there is a gaping chasm between where we were in January 2020 and right now in terms of the number of people working. Keep in mind, though, that this metric can be a little tricky — we wouldn’t want or expect 100% of the labor force to participate, because some people are retired, are students, etc.

Again, people need jobs, and employers need workers. So, there’s a mismatch somewhere. The question is this: How does this ultimately play out? While not all jobs can be done remotely, many can be — will employers need to go all-in on remote work for the positions that allow for it?

And for the jobs that don’t — what can be done? Obviously, if you offer workers enough money, they’ll come. Is that what needs to happen? Or if economic conditions continue to worsen for the unemployed, will people eventually accept a job that they previously weren’t interested in?

We’ll see. But right now, there’s an interesting mismatch in the labor market that’s in need of a solution.

The takeaway: If you need a job, it seems like there are employers that are in need of workers. For both employers and workers, though, it looks like some sort of compromise is needed to make everybody happy.

Investing in professional athletes?

Income-sharing agreements pay off for some investors as a monster MLB contract comes to fruition.

What’s happening: Fernando Tatís Jr., a 22-year-old shortstop and Major League Baseball player, recently signed a monster contract with the San Diego Padres: 14 years, $340 million. It’s the third-highest total in MLB history.

The Padres are making a big investment in Tatís — they see him as the future of the franchise. Rightfully so, too, he’s breathed new life into the team that missed the playoffs for 13 straight years until 2020. They were bad (but not Seattle Mariners bad!).

But there’s another interesting riffle to the story as reported by The Wall Street Journal: Tatís owes around $30 million of his $340 million fortune to another company, Big League Advance.

Going deep: Big League Advance makes investments in athletes, if you want to think of it that way. They find young, promising talent, and enter into income-sharing agreements with them (many schools do the same — it’s an alternative to student loans, where you effectively pay your tuition after you get a job by forking over a percentage of your earnings).

From the WSJ:

Big League Advance uses a proprietary algorithm to project the performance and earning potential of players, in order to establish a set amount it would be willing to pay a player in exchange for each percentage point of future MLB earnings that player is willing to give up. 

For instance, if Big League Advance offers a minor-leaguer $100,000 up front for 1% of his earnings, that player can then decide to accept $500,000 in exchange for 5% or $1 million for 10%. A player valued as highly as Tatís could receive a couple million dollars from Big League Advance. In his first two seasons with the Padres, Tatís earned less than $800,000 in salary.

The Big League Advance payouts aren’t loans. If the player never reaches the majors, he doesn’t have to reimburse the money, and Big League Advance loses its stake. When a player turns into a MLB star like Tatís, Big League Advance receives a huge payout. In effect, Tatís is now funding a bunch of minor-leaguers who will never make it. It’s similar to a venture capital fund that backs lots of startups that fail, in return for a gigantic payday from getting in early on a company like Facebook or Uber.

The takeaway: It seems like we’re always finding new ways to make bets with big potential payoffs. Big League Advance is adopting the venture capital model for professional athletes — a risky model, for sure, but one that has big potential payoffs, like we just saw with Tatís.

It goes to show that almost anything and everything can be seen as an investment. Maybe that’s not necessarily a good thing, but it’s an apparent trend. The question is, what will we be betting on next?

Get in on the SPACtion

SPACs are the hot new way for companies to go public. Here’s how to get in on it.

You may have heard of “SPACs” lately, as they’re kind of the big new thing on Wall Street — despite not being all that new. “SPAC” is an acronym, and it stands for “special purpose acquisition company.” And they’re being used by some big companies to go public, or to get their stocks listed on the exchanges so that you and I can buy them.

More about SPACs: Companies are using SPACs to go public rather than use the traditional IPO process because it’s generally a quicker and easier way to reach their end goal.

And as for how they work? It’s basically like a reverse-merger IPO.

Basically, a group of investors creates a SPAC, which is a company that doesn’t actually do anything or has any assets. It’s like a scarecrow — an empty husk. Then, they raise money by selling shares of the SPAC (usually for around $10 each). The SPAC then picks a target (a company it wants to take public), and acquires, or merges with the target.

Since the SPAC is already publicly traded, the target company becomes publicly traded as well by merging with it.

This has become an incredibly popular method for companies to go public over the past couple of years:

Image and data: SPACInsider

Why would you buy shares of a SPAC? Because it can be a way to get in early on a potentially hot investment. There are some big companies that look primed to go public via a SPAC transaction in the near future (like SoFi, for example), and it can be enticing to think you could invest in a company like that before its stock hits the markets, right?

How do you buy SPAC shares?: Buying SPAC stocks is more or less the same as buying any other stock — you can probably buy shares through your brokerage account.

SPACs go through their own IPO process and go public. So, if you do your homework and know which SPAC is targeting which company to merge with, you can look up the SPACs ticker and buy the shares. Again, assuming that the SPAC itself has already gone public.

We’ll stick to SoFi as an example (and this isn’t necessarily a recommendation). SoFi looks like it’ll go public via a SPAC transaction with a SPAC called “Social Capital Hedosophia Corp V.” It’s ticker is IPOE^.

Look up that ticker, and you should be able to buy shares.

Voila, you’re a SPAC investor.

Things to keep in mind: There’s a lot going on in the SPAC space, and things could change quickly.

There’s a considerable amount of risk when investing in SPACs, which should probably be the first thing on the minds of us average people, and a SPACs success or failure may completely depend on the reputation and competence of its management team.

So, if I go out and start a SPAC tomorrow, and tell everybody that I plan to take Koch Industries public via a SPAC merger, it’d probably be a really bad idea for you or anyone else to invest in my SPAC. Because I’m probably going to fail to bring that vision to fruition.

Also, as a “normie” retail investor, you and I are actually taking on risk so that the institutions don’t have to. A lot of people are making a lot of money from SPACs, in other words, pushing all of the risk onto small investors and raking in big bucks. It’s almost like….magic.

A quick hit from Bloomberg’s Matt Levine:

Real-money investors who buy SPACs as a way to invest in an IPO-to-be-named-later are subsidizing hedge funds who buy SPACs for free money.

Read his whole piece to get the gist. But yes, SPACs are sort of a free-for-all for wealthy investors right now, and they simply may not be worth the risk for average investors.

That’s not to say that SPACs are a bad investment, per see. But it’s not like there’s a shortage of other things to invest in.

Numbers and links

  • $36,990: The new price of a Tesla Model 3, a $1,000 drop. The Model Y is getting cheaper, too. (Reuters)

  • 82%: The percentage of CEOs that expect economic conditions to improve over the next six months. (Axios)

  • 77.8: The life expectancy of the average American in 2020 — down from 78.8 in 2019. (NPR)

  • $28 billion: The additional amount Texans paid for residential electricity compared to other states since 2004. (Wall Street Journal)

  • The Psychology Behind the Boom in Collectibles — a good read to follow up NPNR from a couple of weeks back. (A Wealth of Common Sense)

  • Hockey has big problems: Big goalies. (The Atlantic)

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“Not Pretty, Not Rich” is a newsletter about money, finance, and the economy, written by Sam Becker. You can connect with me through my website, Twitter, LinkedIn, or send me an email at Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.

And remember, the contents of this newsletter are not meant to be taken as advice. It’s informational and entertainment only.

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