I’m in the prediction business, and I’d like to say a few words about the following:
There are two big psychological drivers in finance markets:
- Big Round Numbers
- Extremes
The forthcoming SpaceX IPO is going to provide them both in spades.
You already know the game with big round numbers. The Dow crossed above 1,000 for the first time in history early in 1966 by a single point. After that point, equities sucked as an investment until 1982. More recently, the Dow was above 50,000, which provoked ex-AG Pam Bondi to screech about how we should all be thanking pig vomit. For the S&P 500, it was all about 7,000.
Humans love big round numbers. They’re easy to remember and impressive.
As for extremes, the one in play here is for the richest man in the world. Elon already holds that title, but he’s on track to be the world’s first trillionaire, which is unfathomable. This will be achieved by another “extreme” which will be the biggest IPO of all time, SpaceX which, by the way, will also be the most expensive IPO of all time. I mean, c’mon, who is going to make money buying into a “new” firm with a $2 trillion valuation?
I don’t think any serious bear market can start until this IPO is out of the way, because it is going to package a treasure trove of events and emotions into one golden package. As I’ve obliquely mentioned, I’ll be cheering the IPO and its success, but trust me, a year from now, we’re going to look back at the event as a serious inflection point, and not a good one.
