What If You'd Just Bought the S&P 500?

Every conversation about SPAC losses focuses on absolute returns — the stocks that went to zero, the bankruptcies, the -90% disasters. But there's an even more painful way to measure the SPAC debacle: opportunity cost. What would that same money have earned if invested in the most boring, basic index fund available?

The answer is devastating. $10,000 invested in the average SPAC at the start of 2021 was worth approximately $3,800 by mid-2026. That same $10,000 invested in the S&P 500 (via SPY or VOO) was worth approximately $12,500. The gap — $8,700 per $10,000 invested — represents the true cost of the SPAC mania. Not just what you lost, but what you didn't gain.

The Year-by-Year Comparison

Let's track $10,000 invested at the start of each year in the average post-merger SPAC versus the S&P 500:

Every single year. Not one vintage of SPACs outperformed the S&P 500. Not the early ones that got the best deals. Not the late ones that supposedly learned from past mistakes. Not the ones with celebrity sponsors. Not the ones with institutional validation. Every year, every cohort, every strategy — the boring index fund won.

The Compounding Catastrophe

Opportunity cost is particularly cruel because of compounding. A 62% loss in 2021 doesn't just mean losing $6,200. It means losing the future growth on that $6,200 — the returns it would have earned in 2022, 2023, 2024, and every year after.

Consider a 25-year-old who invested $50,000 in SPACs in January 2021 instead of the S&P 500:

That 25-year-old didn't just lose $31,000 today. They lost approximately $327,000 in retirement wealth — the compounded future value of the money the SPAC mania destroyed. This is the hidden cost that no one talks about: SPACs didn't just take money from a generation of young investors. They stole decades of compound returns.

Even the "Survivors" Mostly Underperformed

The SPAC industry's defense is always the same: "Not all SPACs failed. Look at DraftKings, or SoFi, or Payoneer." True — some SPACs produced positive absolute returns. But even most "successful" SPACs underperformed the S&P 500.

Out of hundreds of post-merger SPACs, you can count on two hands the ones that meaningfully beat the S&P 500. DraftKings and Hims & Hers are legitimate success stories — but they represent roughly 1-2% of all SPACs. The other 98% left investors worse off than a Vanguard index fund.

The Sector Comparison

Every major SPAC sector — without exception — underperformed the S&P 500:

Cannabis SPACs underperformed the S&P 500 by 128 percentage points. That's not an investment sector — that's a black hole for capital.

Why the Comparison Matters

Opportunity cost is the most underappreciated concept in retail investing. When someone buys a SPAC instead of an index fund, they're not just betting that the SPAC will go up. They're betting that the SPAC will go up morethan the index. Given that the S&P 500 has averaged ~10% annually since inception, the SPAC doesn't just need to not lose money — it needs to beat 10% per year to justify the risk.

The SPAC industry never framed the choice this way. SPAC promoters talked about "ground floor opportunities" and "early access to the next Tesla." They never said: "You should buy this instead of an index fund." Because if they had, the comparison would have made the SPAC look absurd. No rational investor would choose a -62% expected return over a +25% expected return.

But retail investors didn't think in terms of opportunity cost. They thought in terms of upside potential. "What if this 10x?" The answer, for 98% of SPACs, was that it didn't 10x. It went to $2. And while it was going to $2, the S&P 500 was compounding quietly in the background, making patient investors richer.

The $250 Billion What-If

Approximately $250 billion in investor capital was deployed into SPACs during the 2020-2021 boom. If that $250 billion had been invested in the S&P 500 instead, it would be worth approximately $330-350 billion today (accounting for the S&P's returns from 2021 to 2026).

Instead, the $250 billion is worth an estimated $95-110 billion — after accounting for bankruptcies, delistings, and average 60%+ declines. The difference: approximately $220-240 billion in wealth that could have existed but doesn't. That's not money that was "lost" in the traditional sense — it's money that was never created because it was diverted from productive investments into SPAC fee-extraction vehicles.

S&P 500 returns based on SPY total return data. SPAC returns based on SPACGraveyard database of post-merger performance. Future compounding projections assume 7% real annual return for the S&P 500, the long-term historical average.