Every market cycle has its own personality. As optimism grows and investors become more confident, companies often find it easier to raise money by issuing new stock or borrowing through bond markets. We’re beginning to see more of that activity today, particularly around businesses tied to artificial intelligence and other emerging technologies. Stock issuance, which had been relatively quiet for years, is starting to increase again.
US Stock Issuance
When enthusiasm is high, investors are often willing to pay increasingly higher prices for companies they believe have significant future potential. SpaceX is one recent example that has generated tremendous excitement. By mid-June, private market valuations implied investors were willing to pay more than 100 times the company’s annual revenue (not earnings, not EBITDA, but revenue). That’s a remarkable level of optimism and highlights just how much investors believe in SpaceX’s future.
And to be clear, SpaceX is an impressive company. Its innovations have transformed the aerospace industry and could play a major role in how we communicate, travel, and operate in space for decades to come.
However, as we often remind our clients, a great company and a great investment are not always the same thing. The price you pay matters.
A Lesson from the Dot-Com Era
One of the most memorable lessons from the dot-com era came from Sun Microsystems co-founder Scott McNealy. Looking back, he noted that the company’s valuation had become so elevated that it would have required years of exceptional growth and near-perfect execution for years to come to justify the price investors were paying. His point remains relevant today: when expectations become extremely high, even great companies can struggle to deliver returns that match investors’ hopes.
The lesson isn’t that innovation is bad, nor that exciting new companies should be avoided. Rather, it’s a reminder that investment success depends on both the quality of the business and the price paid for ownership.
Our Approach
As always, we approach these moments with humility. No one has a crystal ball, and trying to predict exactly when markets will rise or fall is rarely a successful long-term strategy. Instead, we focus on disciplined investing, thoughtful analysis, and keeping emotions in check when excitement runs high.
When headlines begin celebrating the next can’t-miss opportunity—whether it’s SpaceX, OpenAI, Anthropic, or another future industry leader—it’s worth remembering that financial markets work both ways. Companies raise capital because they want access to funding for future growth, and investors provide that capital in exchange for the possibility of future returns.
Our role is not to chase headlines. It’s to help you make informed decisions, stay focused on your long-term goals, and remain confident through every stage of the market cycle.
This article is provided for informational and educational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. References to specific companies, including SpaceX, OpenAI, Anthropic, and Sun Microsystems, are provided solely for illustrative purposes. Such references are not intended as recommendations and should not be interpreted as an indication that any investment will be profitable. Opinions expressed are those of the author as of the publication date and are subject to change without notice. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.
