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SpaceX last closed at $185 on June 18, up roughly 37 percent from its $135 IPO price and now “worth” about $2.4 trillion. We are skeptical of the market quotation, and our reasons are set out in our note from the listing here.
Below, we highlight the three pieces that deserve your time this week.
Aswath Damodaran asks whether SpaceX, OpenAI, and Anthropic belong in the S&P 500, and whether it even matters. Skeptical of the loudest voices on both sides, he lands on an interesting point: the old price bump from index inclusion has largely vanished, and newly added names now tend to underperform in the year after they join. Tesla is the clean example, lagging both the index and the company it replaced after its late 2020 addition. For a long-term investor the message is that inclusion does not move intrinsic value, so it is not a catalyst worth paying for.
Chris Satterthwaite of Verdad shows that the factor driving this rally is not the one the headlines name. The biggest winner has not been AI or chips but high-volatility stocks, the lottery tickets that normally lag, and Verdad’s low-volatility factor is down about 13 percent since late March, a two-month drawdown at the 0.5th percentile of everything since 1996. Episodes this extreme split into two opposite outcomes, rebounds off a bottom and junk rallies near a top, and Verdad sets the analogues side by side without telling you which one applies.
Phil Bak turns a family road trip into the most unusual piece of the three. Talked out of a motel by his son’s logic that a night of camping at least leaves you with a tent to show for the money, he widens into a market priced for perfection, a Buffett Indicator near 230 percent, a CAPE at dot-com levels, and the fraying society around it. His point is that being honest about stretched valuations and a widening wealth gap is not bearishness but a refusal of the comforting lie. It is the most enjoyable thing I read this week, and the one most worth your time.
This week’s 71-page presentation is available for download below.
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