He Lost $157,000 in 3 Minutes | Jack Raines on the Lesson Winning Never Taught Him

Matt, thanks for having me. The 10-gallon hat is only on the picture behind you, not on your head. Should I be disappointed? All right, let's get this right.

I would accept nothing less in this interview. So, thank you for adorning the cap.

Yeah, correct. I've not spoken about my book at all and have not marketed it any.

Happy to be here anytime. I mean, dude, this is like it, you know, it's chatting with Matt and it's the New York Times exclusive. That's the order of media hierarchy in 2026.

I mean, the finance angle is I was trading SPAC warrants in my Roth IRA. I'm going to assume the majority of people listening to this are somewhat familiar with SPACs and are familiar with the boom-bust of SPACs during the pandemic. The book quote is more of a life philosophical take, but I actually think it's a very good personal finance take too. I think when you're... well, I'll explain what I did. I turned six grand into 400 grand trading SPAC warrants in my retirement account in 2020 and 2021. The SPAC trade stopped working mainly because everybody and their mother was launching a SPAC because there's so much money going into SPACs. When Shaquille O'Neal has a SPAC, former Speaker of the House Paul Ryan has a SPAC, and a bunch of other random celebrities have SPACs, it's probably a bubble. Kind of like when Snoop Dogg launched a cryptocurrency that also marked the top for crypto. Similar thing with SPACs. I did not lose money when the SPAC bubble popped because I was good at trading SPACs. But I had turned six grand into 400 grand, and I was pretty sure I could turn 400 grand into a million and do six grand to a million in about a year if I really hit a couple of good swings. I mean, when you're up 6,000%, you only need to make another 150% to be a millionaire, you think it's pretty doable. And I went all in on a buy now, pay later small cap that had gone public through a SPAC but was no longer a SPAC, and I thought they were cheap on a multiples basis compared to competitors. What I did not realize is if a company is cheap and they miss earnings bad enough, it can get 50% cheaper, and it did. And I lost about $160,000 in a day as a 24-year-old, and I stopped trading, at least speculating, after that. All that being said, I learned a ton, right? Like you throw money... there is no professor like Mr. Market when it comes to... you can read about boom-bust cycles, whatever, like 1873 about the Rothschilds, great book, it tells you about the boom-bust cycles and like the Austrian stock and real estate markets. Cool, I can really resonate with that having turned... you know, you make hundreds of thousands of dollars and lose it, it's like, man, this really hurts your soul. If it happens to you when you're young, though, it sticks with you for the rest of your career, and it's not that you'll never speculate on stuff again, but once you've had something blow up in your face, you know how that feels. You just know like you're just not going to put yourself in a position to ever experience that again. It's like if I was ever shot by a gun, I would probably avoid getting shot by a gun in the future. It feels like that. So I think the... especially for young men, I think the best thing that can happen is like lose a decent sum of money when you're 24 because you have all the time in the world to earn it back. You probably won't have that much to lose to begin with compared to future earnings, and you're not going to derail your life then like you will if you've never lost money and then you get a sports gambling addiction at 34 or whatever when you have a three-year-old. So yeah, young people, my counterintuitive financial advice is most young guys should have like a $6,000 'if this blows up, fine' account and then just see what happens with it. And I think it would produce a lot of learnings that would protect them over the course of their life.

So we'll progress out the context. I do like that this is a finance-focused, investing-focused podcast because we can get super granular versus...

This is so... okay, good. Thank you. I've actually been waiting. I lied that, you know, this is an exclusive. I've had a lot of podcasts I've been on. Most people don't know what the hell a SPAC is. So, set the stage. It is Q1 2020 or Q2 2020. I graduated college December 2019. Started working in corporate finance in Atlanta, Georgia for UPS, the world's biggest logistics company, which is now getting their ass kicked by FedEx and Amazon, whatever. I was working remote because COVID, and I turned 10 grand into 30 grand. I had 10 grand in my name from my signing bonus at work. I threw it all in SPY puts, made 20 grand, thought I was Michael Burry — like good Michael Burry, not current Michael Burry. And I then bought more puts the day that Bill Ackman cried on TV, and I lost 20 grand. I said I went 10 grand to 30 to 10. That hurt. I said, "I'm never going to trade again." Three weeks later, I just deposited $6,000 in a Roth IRA as a responsible little investor. One of my college friends texted me and said, "Hey man, do you know what a SPAC is?" And I said, "No." And he said, "I don't either, but I saw on Twitter that if you buy Diamond Eagle Acquisition Company, which is a SPAC, and you hold it for a couple months, you'll have DraftKings stock." And I said, "Okay, so it's like an IPO vehicle." He said, "I don't know what that means." And I said, "Okay." So...

And he made money on that. So I... well, you know, I was always a finance guy in college. I worked for our student-managed investment fund. I liked financial markets, and I looked into it, and it's like, okay, SPAC is basically a publicly traded bank account. And I see, okay, there's these... DEAC was the ticker, Diamond Eagle stock, shares, and there were units, and there were warrants. And then I look into it. It's like, okay, the way they price the deals are the investors in the SPAC got units for their money at $10 a unit. And after 30 days or 90 days or whatever, every unit came with like half a warrant. So for every two units you had, you ended up with one share, or you ended up with two shares and one warrant. The nice thing about the SPACs was that because they were backed by money in a bank account, the investors in the SPAC can redeem that money before the merger went through if they like didn't agree with it, didn't like the price, whatever. So there was like a redemption floor even during COVID. A lot of the SPACs briefly traded below the floor when a lot of people got margin called, but there was like cash in the bank account worth $10 a share. The only real risk was like time. But the stock could trade above its, you know, NAV value at any point if people are really hyped about it. So the bubble starts happening in 2020. Things that turn into meme stocks: sports betting, DraftKings, electric vehicles, marijuana, and outer space. So I noticed the DraftKings stock went from 10 to 20 before the merger closed. The warrants went from like a dollar to $9. I was like...

Yeah. And then I was like, were there any other SPACs? Is this a one-off? And I saw that Virgin Galactic went public through a SPAC in fall 2019. Same thing. The stock had started to rip as the market started to recover, and the warrants... there was just... it was a levered bet. When I lost money trading options, it was because I was buying like two-week-out SPY puts where I was just getting wrecked by theta, and I got like absolutely smoked, right? And I'm looking at this, it's like, okay, so a warrant is just a call option for one share instead of 100, and they don't expire for five years, and the strike price is 11.50. If at any point this stock memes, this warrant is going to mega meme. So I should just yolo warrants in a hot sector before it rips. And that's what I did. Nikola was the next SPAC that was big. Totally fraudulent company. Didn't matter. Everybody wanted to bet on the next Tesla because they had 10x'd over the last year. I bought Nikola warrants at $2, sold them at five, made like 15 grand. The stock proceeded to run to 94 where it was worth more than Ford because on paper it was valued at like 70 billion, and the warrants ran to like 50, whatever. I made some money. Then I got really good at this. Apollo had a SPAC and they were targeting an energy company, and the background of their website for the Apollo SPAC — it was called Spartan Acquisition Company — they had oil rigs and like people in cowboy hats or whatever, super like western oil basin stuff. Mid-July or late June 2020, they changed their website header from oil rigs to windmills, and they'd added somebody on their board with like green energy experience, and I was like, they're going to play into the climate grift and take like an EV company public. Nobody else has noticed this. The stock didn't move. Like a very stupid catalyst to make a bet on — website change. YOLO all in on Apollo warrants at like 0.7 cents a warrant. They announced a deal with Fisker Automotive. Warrants ripped to like $4. Stock jumps from 10 to 15 because oh no, another EV, and Henrik Fisker made the car that Justin Bieber drove back in the day. They ended up selling like 25 of these before the company went bankrupt. Didn't matter. I sold as soon as the deal was announced. Made like 50 grand. Lucid Motors, same thing. I basically parlayed SPAC after SPAC from six grand to 150 grand just trading warrants. And then at that point I had enough money where the warrants could go to zero. Like if a deal doesn't close, the warrants are worthless. But the shares always have that $10 floor. So once I got over $100,000, I realized the right play was get in as close to $10 and change as possible and then sell whatever the rip was. Whether it's like a founder going on Jim Cramer's show, whatever. If it's a sector where the valuation is reasonable and the stock can meme, there were all these arb hedge funds that would like buy a bunch of units and then like once a deal was announced, they would just start selling off and the buy volume. So I was just really good at the second a deal was announced, trading would halt. I had some bots that would send me push notifications for every SPAC that was listed where anytime a SPAC deal was announced, trading would halt. I would like skim the investor deck, look for like sector valuation, revenue, who the founder is, who's on the board, and if my internal calculus or intuition said this will meme in like two weeks, I would just sell whatever I was holding and put in a limit order at like $11 for that SPAC. Max loss on any trade is like 8%. Down to $10 and change. If it ripped from 11 to 15, I make 40%. I sell. So I just kept parlaying those trades where I was risking like eight or nine percent on any trade by going all in for something that I think could rip, and it worked. And I basically ran that from... I was trading warrants from 6K to 150, and then I ran the commons trade from 150 to about 400 at the peak. The issue with that is you get addicted to trading because you're making so much money. For like... I was a kid, and my one regret was having too small of a capital base because it just started working. Otherwise, I could have made a couple million bucks before it stopped working. But the SPAC trade stopped working because once there were hundreds of SPACs, it was like the same pool of capital jumping from SPAC to SPAC, and it just doesn't work when there's hundreds of them. And I falsely thought that because I had an edge in one very specific part of the market — I stand by I was very good at trading that — that does not apply to the market as a whole. Like you have to have some edge. And there was a company called Katapult that had gone public through a SPAC. It was now just a public company, so there's no floor, can go to zero, fully risk on. This was around the time that Square bought Afterpay for like tens of billions of dollars and Affirm had just gone public. Katapult was more profitable and faster growing than both of those. They just had a lot of customer concentration risk with Wayfair being like 70% of their transaction volume. I figured if they just had one or two sell-side analysts cover the stock, it would double just off of a multiples comparison. So I went all in on a mix of shares and warrants about two weeks before their earnings in August of 2021. I figured I would double my money on that and I would make $600,000 or like at least $400,000 and round up and be a millionaire. And I do think I would have sold that. I kind of had this... it would be cool to hit seven figures, and then it's all in a Roth IRA, right? To have a million dollars in your Roth at 24, it makes Peter Thiel's PayPal Roth IRA look like chump change. So I'm all in on this thing. I know it's going to rip, and earnings come out and they miss earnings. And I was like, in my head, an earnings miss was probably priced dead in because it was so cheap. I learned very quickly that even if what happens is to me irrational, the market doesn't care. And like the market is the market. Like the market's not right or wrong. It's just everything's entry points and exit points. I was the one who was wrong. The warrants got chopped in half immediately, and the stock fell like 25%. I lost $157,000 in three minutes. And I was looking at the order book, right? I was in TD Ameritrade. I felt like I just got slapped in the face by Mike Tyson. I mean, it hurt. And I'm looking at it. I was like, "All right, somebody has a buy order for like 45,000 warrants marked down 30% from yesterday's close. That's going to hurt. If I don't sell into that order, somebody else will, and then I'm going to lose even more money." So I basically just like sold the bid for all the warrants and shares and just bought index funds and just didn't touch that Roth again for three years after that. So net net, 6K to like about 180K net net, which is objectively awesome in a year and a half. But there was a $220,000 haircut in the middle. So I was like, situational awareness SPAC edition. It was sick.

Both, right? Like I was very particular about making sure the downside was covered on the commons trades. Like when I was buying the warrants, I was aware that like these could go to zero if a deal doesn't close. The bet I was making was that I was either buying SPACs that had two-plus years left to find a deal where like it's not like I was buying something a month before shareholders could redeem the cash and go to zero. So I was playing a game where there was some illiquidity risk, but even with like hundreds of thousands of dollars over the course of a week or two, you can get out of a position without moving the price that much, even if it's pretty illiquid. So I was pretty aware even when trading warrants that I would not put myself in a position to get wrecked by like failure to close deal making warrants go to zero. And I also knew given the expiration date on the warrants, I didn't have to worry about duration risk because realistically the longest time I'd stay in something was like three months, two months, and nothing happened, I would start offloading. And then when I started trading commons, I would double check... like I don't even remember what the... it's not an S-1, but whatever the SPAC version of like an S-1 is, I would like make sure that I understood how the redemption clauses worked. Like I would make sure you could check every 10-Q to see what the NAV was of the SPAC. So it's like the NAV is $10 and it's $10.20, like I would know what the max loss was on any trade. So it sounds degenerate saying I was parlaying SPACs, but going all in on a thing that I knew narrative was driving the upside, right? Like I was aware that the upside on this is hype, but the downside is math, right? Where at the end of the day, there is a redeemable amount of cash I can get. So it was a mix of you're trying to have this intuition for how hot will this thing rip on narrative, but then the loss was math and financial education. The gains were narrative and vibes and momentum. And it's like at some point, you know, like Lucid Motors, I sold when it ran up 40%. It ended up running up 400%. But it was overvalued at the price the deal was done at. Like it's still trading below that five years later. So how do you price hype? It's tough. So for me, a 50% pop is plenty enough hype that I can rinse and repeat that pretty regularly. So that's how I was playing it. So I call it... it was a barbell strategy of like math and degeneracy. And if you play both, you can make money.

Yeah. I had a burner Reddit account called Barlo Anthony, which was my GroupMe name in college where we all had names that were play on words between Xanax bar, which was all the rave in college. I never recreationally took Xanax, knew some people who did. But Xanax bar and Carmelo Anthony, New York Knicks legend. And I co-founded the SPAC subreddit, and it quickly became apparent that me and about 30 or 40 other people out of the now 200,000 people kind of knew what we were doing. We made a separate Discord chat where some of the guys who had computer science backgrounds had built bots that were scraping all the EDGAR filings to like send us... I was getting the push notifications about every single SEC filing for like a merger deal because they were pinging my line on Discord or Telegram or something. So it was pre-AI, but I was like in a group chat with people who just knew how to build bots that could pull the filings quickly, but it was just like manually parsing. I was still having to go through and like download, read the files, right? So yeah, no AI. I mean, this game would have been so much easier today just having like Claude Code. Like I have Claude skills that can pull all this stuff like that. But thanks to, you know, work remote, I just wasn't doing my actual job. It was just like digging into SPACs all day. It was great.

Yeah. I mean, it goes back to what I said a second ago about the... you have to play math to know the downside risk, but then you have to put yourself in the mind of what is Twitter or Wall Street Bets going to do with this thing to drive the upside. I think that's... I mean, I think that's how public markets work today to some extent. Like you have pod shops playing quarters, and then you have stuff like Opendoor ripping 500% because a bunch of people on Twitter are talking about it, right? Where if you're terminally online, you can kind of pick up on vibe shifts, which sounds crazy, but it is a thing. You're seeing it now of software names. I bought a ton of Figma at like $17, $18 a share a couple of months ago because I actually use Claude Code all the time, and I was like, Canva might be hosed because people might not make PowerPoints anymore, but Figma isn't. And I call a couple of buddies who are designers at big companies. I'm like, hey, are you guys replacing Figma with anything? And they're like, no, like the high-ups at our company are like trying to... they tried to say, hey, try AI tools, and we threatened to quit because we like Figma. It's like, okay, well, this probably shouldn't be down 85% from the IPO, and collaborative software probably benefits from AI. Figma's up 80% since then, right? But you have, you know, retail starts yelling about a thing online, and that can tank it down and up. And then pod shops playing quarters are also amplifying the whole thing where if you can take a step back and it's like, can I be rational about irrational behavior and then act on that, or can I forecast how irrational a thing can get and hold until like you're maximizing your profit on that? Yeah. That like on the SPACs, the math was... I even looking back, it's like, okay, these are fairly sophisticated deals, but emotions are driving a lot of the like midterm price action. If you're aware of that, it makes it easier to stomach some of the declines because you understand the math. And it also makes it easier to be comfortable with, well, you know, Benjamin Graham is probably rolling over in his grave seeing some of this, but guess what? You didn't have Discord and Reddit back in the day.

He would have loved SPACs.

I mean, I majored in finance and Spanish in undergrad. We did the CFA research challenge where you're pitching a stock against a bunch of other... it's like a national competition divided by regions. I worked on that, and yeah, I got an MBA from Columbia, and Michael Mauboussin was one of my professors. So I have... even though I've never worked in public markets, I've had to take plenty of exams and memorize the stuff to a point that the vernacular is kind of embedded in my brain. Yeah, like I, you know, I think financial markets, especially public markets, I think there's a lot of analogies between like markets and life, particularly with portfolio construction and life construction. You can, you know, if a portfolio is a series of bets and there's like an efficient allocation of capital across depending on what strategy you want to run, you know, you can spreadsheet your portfolio to figure out what the maximum amount you should allocate toward any position based off of like what kind of Sharpe you're trying to run, right? I think life is kind of the same way where whether it's thinking about like your career as a portfolio of... I wrote a book. A book is very much a right-tail, almost like a venture capital level bet where the median case makes no money, but if it becomes a bestseller, it absolutely rips and opens up career opportunities or whatever. And you can view being like a... I don't know, like a VP at Salesforce as the fixed income of career options, right? So I don't know, I think it's because I've written about financial market related stuff so much on my blog, but I've also written about like why it's important to go travel or do crazy stuff when you're young because you can't do it later, that I've applied like portfolio theory vocabulary to thinking about life construction. But I don't think they're that different. Like you know the value of a call option decays over time if you're buying like call options on Figma, right? Well, guess what? Like call options... you as a human being are basically a call option when you're 20 years old. And at some point you need to like cash in some of those options, otherwise their value declines too as you get older. Obviously at the end of the day you die at some point, right? So then like the value of everything goes to zero. But your ability to turn that option into capital, all things equal, declines over time without an increase in your internal value, right? Like I like the way that we think about option value in financial markets. I think about potential as a human in the labor force. It's just... it's all kind of the same thing. Like the way you set up a portfolio, the way you set up your life, like it's all figuring out how do you allocate time, money, and risk. And that's a spreadsheet thing, that's a real life thing. I just think they're really interchangeable. And finance gives a very... finance creates an interesting way to quantify life.

So the way that I think about life in general is there's the XY axis of life is time and money. Those are kind of like two assets that sort of dictate everything because everything you do in life either takes your capital or creates you capital, and everything takes time, right? So money in that aspect is fungible. You can spend money, you can lose money, you can make money. There's like no upper limit on how much money you can create, and there's also no limit on how much money you can spend or lose over time, right? But time is like a totally non-fungible asset where it both is always declining, and as I'm starting to realize I'm approaching 30, it appears to be accelerating. Everybody older than me says, "Oh, you think your 20s going by fast? Wait till you get to your 30s." Yeah, well, I guess I'll know in a year. So because of that, I have a section of my book talking about the stage specificity of life and how there's like, you know, in a long enough timeline, we're all dead. Call it 90 years. Even before you die, like every stage of life is a little bit different, and who you are as a person, what you value, what you desire, and which uses of your time and capital will provide you with the most utility — to use another economic term, not a finance term — marginal utility. There's a marginal utility of a dollar. There's also marginal utility of like time spent doing things. And 25-year-old me had a much different set of priorities than 29-year-old me does, and certainly than 35-year-old me will. You know, I mentioned when I was 24, I backpacked Europe and Latin America for a year. I was staying in hostels and like sharing rooms with 11 strangers and sleeping in a bunk bed. And it was hilarious. Like it was one of the most fun years of my life. I would hate, hate being in a bunk bed with some like drunk 22-year-old French guy who's probably smoking a cigarette in the bunk above me, right? Like that sounds awful. But at 24 it was kind of hilarious. It was a good bed. So I sort of... one thing I don't know, one thing that I think I did well that a lot of young people kind of miss is I was keenly aware at 24 that I had this really finite window of opportunity for crazy fun adventures that I just would either be very difficult for me to do later because of increased career and life responsibilities, and/or I just wouldn't enjoy because I would be an older person who's in a different stage of life. So knowing that time was not fungible and I had this, you know, like quickly closing window of opportunity to do the crazy fun thing, I decided to spend a year doing that, and I had a blast. And it was like I was spending more money than I was making. I didn't care. And it sounds irrational if you're just thinking from a compound money over time. A lot of people say you should try to maximize your earnings in your 20s to set yourself up later in life. There's truth to that, but there's also stuff you can do at 24, 25 that won't make you money, but you'll be glad you did it when you're older. And so when I think about fungibility, it's like, okay, I don't stress about money all that much because I'm pretty aware that there are an infinite number of ways to make money, and you can always make more money. There are times where it's easier to make money, like you can work longer hours in your 20s when you don't have a kid than you're going to want to do in your 40s. Like I also get that. There's trade-offs in all of this, but there's also like there's certain experiences you just can't capture later. Therefore, if there's anything you feel really strong conviction about now, time isn't fungible. You can't buy back a year of your 20s in your 60s. Therefore, if there's stuff in your 20s you want to do, you should probably do it. So yeah, money is fungible. You can make more of it. Time isn't. How do you want to spend it?