Have you been hearing a lot about SPACs? They are one of the current poster-boys for market froth, along with Tesla, IPOs, bitcoin, and Robinhood traders.

Officially, SPACs are ‘special purpose acquisition companies,’ but are often called blank-check companies. Historically, a relatively well-known investor would raise cash and form a SPAC, which is publicly traded. But, until the SPAC went out and bought a company with the cash they raised, not much happened since it was just cash trading in the public market.

Until recently, SPACs were relatively sleepy, and often a place where arbitragers would make a little money since SPACs often traded at a discount to the cash on hand.

In recent years, SPACs have turned hot because they are now used as a vehicle to take companies public, as opposed to the classic Initial Public Offering (IPO).

Now SPACs are everywhere, and the sponsors are often household names, like former House Speaker Paul Ryan and basketball star Shaquille O’Neill. Last year, Richard Branson took his space company, Virgin Galactic, public via a SPAC.

Ten years ago, there were about a dozen SPACs with about $1-2 billion in capital. This year, 67 SPACs have been launched with $20 billion in capital. Last year 67 SPACs launched and raised $82 billion.

That’s a lot of companies with a lot of capital chasing deals. And, that’s the issue: whenever there is ‘too much’ capital floating around, bad deals get done.

We’ve seen this before in the late 1990s with IPOs. In a sense, SPACs are the same thing, but the process is faster and more streamlined, which probably lowers the quality of the company going public in a lot of instances.

As broadly diversified investors, we don’t have to think much about SPACs, except as a signal that markets may be hot right now.

Of course, that doesn’t mean we should run out and sell everything either, since markets can stay hot for a long time, and it may be a signal that doesn’t matter.

When it comes to SPACs, bitcoin, Robinhood, and all the rest, I’m reminded of the Shakespeare quote about the sound and fury that signifies nothing.