Rockin' In The Free Markets

Investors have been looking for alternative investments and will be able to invest in a guitar from an alternative metal band. Gibson is using Rally to sell ownership of collectible guitars. The company recently sold 13,000 pieces of a guitar owned by Guns N' Roses guitarist Slash for $5 each. Of course, the company did not cut up the guitar, but sold a fractional share. Other guitars by Tony Iommi of Black Sabbath and Adam Jones of Tool are scheduled for sale. Of course, as with any collectible market, it appears that guitars that are not especially rare are having prices plucked up with the prices of rare guitars. The real question is will investors fret over the investment in the future or will it turn into real Money?

Hamsters Spinning Wheels

Early critics of the efficient market hypothesis claimed incorrectly that market efficiency meant that a monkey throwing darts at a list of stocks was just as good an investment strategy as any other. Now we have hamsters spinning wheels. Mr Goxx, a hamster, makes cryptocurrency investments by spinning a wheel. Two men in Germany have created a cage in which Mr. Goxx spins a hamster wheel. Where the wheel stops selects the cryptocurrency for investment. Then, Mr. Goxx enters one of two tunnels for a buy or sell order. Switches on the wheel and tunnels automatically execute the order. Since Mr. Goxx has begun investing in September 2020, his return is above all major stock market indices. Are you ready for a hamster investment advisor? We hope not!

Bonds May Save Reefs

Belize is well-known for its coral reefs and scuba diving, including the Great Blue Hole, which Jacques Cousteau called one the five best dive sites in the world. Now, Belize may help save its coral reefs through bonds. Belize has a "superbond" outstanding, which is a combination of previous bond restructurings. The par value of $572 billion is part of Belize's 133 percent debt-to-GDP ratio, which the International Monetary Fund has stated is unsustainable. Belize is engaged in talks with bondholders to exchange $550 for every $1,000 in par value. Under the terms of the agreement, Belize will invest a significant amount in support of marine conservation aimed at protecting its reefs. Currently, 50 percent of bondholders have agreed to the terms, although 75 percent of bondholder support is necessary for the proposal to pass. 

SPAC Issuance Slows

Early in the year, SPACs were all the rage as a way to sidestep the IPO process. In January, 97 SPACs went public compared to 27 IPOs.  In July, there were only 32 SPACs compared to 57 IPOs. In fact, many SPAC investors are selling their shares or redeeming shares when a deal is announced. Reasons for the slowdown in SPACs are increased SEC scrutiny and the fact that 438 SPACs that had raised over $130 billion combined have yet to find a merger partner. Additionally, as Jay Ritter from the University of Florida notes, 94 of 131 SPACs that have announced mergers since October 2020 are trading below the initial $10 price.

Buyback Excise Tax Proposed

In the textbook, we discussed how buybacks have a tax advantage over dividends because it results in a lower effective tax rate for shareholders. A new law being proposed in the Senate would levy a 2 percent excise tax on all funds used for share buybacks. Although the statement released by the Senator Ron Wyden, who is proposing the buyback tax, essentially argues that buybacks are ill-advised, the evidence is not quite as clear.