Compound Growth

What the Biggest IPO in History Means for Your Money

• Compound Growth • Season 2 • Episode 16

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Most people think of an IPO as a news event. A company goes public, the ticker starts flashing, and you decide whether to buy in or not. But what's coming in the next 12 to 18 months isn't just a news event — it could be one of the most consequential reshufflings of capital in stock market history.

Wheeler and Colin use the story of Uber's IPO as a starting point: a company that was visionary, polarizing, massively hyped, and still managed to underperform the S&P 500 by nearly 20 points over six years. From there, they build the case for why the pending IPOs of SpaceX, Anthropic, and OpenAI are categorically different in scale — and why the ripple effects will reach people who never buy a single share.

The conversation covers how IPOs actually work, what history says about which ones survive and which collapse, why passive investors are going to own SpaceX whether they want to or not, and what happens to a market when three companies worth a combined $3 to $4 trillion try to enter it simultaneously. Colin also walks through the tax and strategy considerations for people sitting on locked-up private equity — and why borrowing against appreciated stock is often smarter than selling it.

This is an episode about preparation over prediction. The IPO wave is coming. The question is whether you understand what it means before it arrives.

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Credits:
Created By: Wheeler Crowley and Colin Walker
Production, Editing and Post-Production: Tori Rothwell

All right, Colinimagine, if you will, a company built around a controversial, magnetic founder, a guy who genuinely believes he's going to change how human beings move through the world- Hmmfundamentally.The kind of founder that makes institutional investors nervous-and excited at the same time.The company is private for years.Evaluations climb, 18 1000000000, 40 1000000000, 68 1000000000, each round bigger than the last, fueled by sovereign wealth funds, and the biggest names in venture capital.Everybody wants a piece.SoftBank alone writes a check for $7.7 1000000000.Okay?Okay.I'm following.They like to throw money around.Not a big deal for them.But do you?Do I what?Wanna throw money around at this crazy idea?So here's the, the core thesis.Take one of humanity's oldest obsessions, the desire to move faster, farther, more freely, and reinvent it entirely.The founder has been called a genius and a fraud, sometimes in the same article.There are regulatory battles in basically every market they enter.When they finally go public, it's one of the most anticipated IPOs in a generation.Would you invest in this company?No.Well, if you did, you could buy it right now, because it's Uber.I knew it wasn't gonna be SpaceX.I knew you weren't gonna make it too easy on me.Uber.Yeah.You wanna know what I was thinking about the other day, actually, with Uber, is I was actually thinking about just rental units in general, and how everybody- Hmmlike throws a stick up about, well, what happens if you have a bad renter?Like, what happens if this happens?Yeah.You know, you have like, it should be- Yeah, yeah, yeahlike all these things can go wrong, and blah, blah, blah, blah, blah.For Airbnb.For Airbnb in general- Yeahor just rental units in general.Right, like that's it.Just anything involving a house.Yeah.And I remember when Uber was becoming a thing, and people were like, "Why would you ever get into a stranger's car?"Right.Like, you- Yeahare signing yourself off.That is so dangerous.Yeah.Everybody out there is trying to kill you.No 1no one believed in Uber.Now, every single, not every single country, most developed countries have Uber at this point.Yeah.It's- We use it when we go to Europe constantly.I, I have never once thought about it ever again.I mean, sure, there's safety things that pop up, in the same way that people can break into your own house, you know?But I remember when this was so controversial- Yeahwhen it was coming out, that just, like, no one believed in it.And it was, it was one of those companies where, like, it was easy to hate them too, and so you'd have like- Totallyyou'd have Lyft was basic- Lyft existed to be, like, the nice guy version of Uber, right?Yeah.Like it's the safe, kinda like, it was, like, uh, they had a bad reputation.Correct.Right?Yeah, yeah, yeah.And they solved that by getting rid of the CEO.They did.And now it is kind of, like, prevalent.It's everywhere, and it's like, it's, I guess to your point, like traveling, Uber is with you everywhere.Mm-hmm.Like, I can go to Vermont in some places, not all places.But in some places I can still get an Uber.I can't get, like, a Yellow Cab.Sure.Right?Yeah.So Uber debuts IPOs,The day after the IPO, it was down 7%.Okay.So you're better off waiting one day.6 months later, it was 40% lower, right?A year after it debuted, 68% lower.This- I remember this.Yeah.It was not a great trajectory.Yeah.The stock has since recovered.It's up 84%.When did it IPO?Uber was 2019.2019, okay.Uber debuts in 2019.So to be fair, a lot of things happening there, right?Because Uber debuts in 2019, a year later, it's COVID.So like, yeah- Surea lot of stocks were down.Yeah, and no one wanted to get into someone else's car in fear of COVID.So it's not the fact that it was down 60-plus percent a year later that I think is interesting.I think it's interesting that it was up, or is up, as of this recording, about 84% since it IPO'd- Yeahwhich is pretty good, except the S&P in the same timeframe is up 102%.It's dramatically underperformed.Yeah.So what are your thoughts on IPOs, Colin?Welcome to The Compound Growth Podcast with Colin and Wheeler, where we talk all things growth.From financial growth to career growth, personal development to societal progress, we explore how each layer builds on the next, compounding over time to shape who we become.Each week, we break down complex ideas and emerging trends into clear, actionable insights, because growth isn't just about numbers, it's about understanding the world and our place in it.Well, I have a lot of thoughts on IPOs.I think where we should probably start is what an IPO actually is.Educate us.Yeah.So IPO, initial public offering.A lot of companies, actually the majority of companies in the US and globally, are privately held companies, meaning that they're not open for public investment.When IPO happens, that is the first time a company is becoming available for purchase on the open market, whether it's the Nasdaq, S&P, it's on an exchange that you can purchase and own shares of that business.Right.So that is what an IPO is.Where things get really opaque are the questions that people often ask us.I remember Rivian was the most recent big 1 Mm-hmmfor me, that most people were asking me about.Like, "Should I get in in the beginning?Do I need to buy shares of this?"Like, "I think it's gonna go up."And the question is, is why do you think it's gonna go up, because there's no track history from a, from a stock perspective.As of, you know, before the IPO, it's all privately held shares.You don't have access to all of the financial information.You have some of it, but when a company IPOs, that means that everything is now available for view in terms of the financials, the projections, cash flow, all that stuff- Rightis now available to the public for research.Well, and that's what destroyed WeWork.Totally.Right?Because WeWork, when they were- Once you open up the- Yeah.Once you open up the books- Yeahyou're like, "Oh, my gosh."Yeah.They're like, "Wait a second."Yeah.And then, and then there was, there was no realThe IPO was delayed for, like, years until it- Righteventually SPAC'd, which is a whole different- Yeahballgame.We can get into that.Yeah, that's true.So I, I think the IPO, to your point, is when you get a public valuation.For a company that was private before.And then that becomes an opportunity for the mass public to invest.And then it also becomes the opportunity for the mass public to lose money.Yeah.Um, or it becomes an opportunity for the people who were private to get out, right?They were-- They had the stock when nobody else could, and now they get to do something else with that money.And more often than not, and this is why people have always been excited about private equity, more often than not, the IPO price is higher than whatever the, uh, private price was, right?Totally.Yeah.It's an opportunity to raise money.That's why the company's doing it.To make- To raise money.Yeah, exactly.I mean, a lot of the ways that companies grow in the beginning stages is by taking on investments from private equity.So people write them a check, they put it into their business, hire more- Rightexpand, whatever it might be.And then eventually they get to the point where they need more money than the private investments that they've received, and a good way of raising more cash is going into the stock market because you are going to receive a good chunk of cash flow from coming in from the open market.And the people who've been private and seen their, their net worth increase, their investment increase, now have an opportunity to liquidate, right?Hundred percent.And get- Yeahout of that investment.Yeah.So why are we talking about this right now?Well, there's 3 big reasons.Yeah.One big one.It's the one big one.SpaceX is the biggest one.Yeah.But then we also have Anthropic and OpenAI.Yeah.So 3 of the biggest IPOs in history are on the docket in the future.SpaceX is the imminent one.Theoretically.Yeah, yeah, yeah.In theory, Anthropic and OpenAI will be coming down the pipe at some point.Pretty massive ones.Exactly.You know what's interesting to me, so SpaceX, the, the talk is a trillion dollar valuation, right?I think- I saw one, $1.7.1 pointOkay.Let's calm down, everybody.That's what I saw.We're taking, we're taking a company that's valued at, like, six hundred and fifty billion right now- Yeahand y- to your case, doubling it, right?Yeah.Just by going into the public market.Trillion dollars is a lot.It is.I asked- Some walking around money.I asked one of those other IPO candidates to put that in perspective for me.And- How much a trillion dollars ishow much a trillion is.Just the number a trillion.And here's mythe, the fun part I took away from that.One million seconds is 11.5 days.Hang on.Pause.One million seconds, 11 and a half days?Yes.Okay.All right?One trillion seconds 31,709 years.All right?So that is larger than human history.All right?So if you spend a dollar a second, you could never ever spend all your money.How much was it in years?31000.31 thousand years.Seven hundred and nine.Almost 32 if you wanna round up.So basically, humankind has been around for 15 to 20,000 years- Yeah.It's-in theory.It's adorable.That was going back to, like, when we were cavemen.Yeah.But still, that's-Yeah.That's, like, shocking.I always, I always love the, uh, analogies too of, like, the skyscrapers.Right.Yeah, like how, how far away- Like, a billion dollars stacked up is, like, 4 feet- Yeahversus, like- Yeahyou know, a trillion, like- Yeahgoes, like, above theYeah, exactly.A trillion miles, uh, was another one.It was, like, 11 round trips to the sun or something like that.It's like a trillion is a lot.It's a lot.And it's, it's really hard because, like, I feel like we, we anchor to these numbers- Mm-hmmwhen we're kinda, like, growing up as, like, you know, I wanted to be a millionaire.And maybe that's not just growing up, that's just, like- Yeahhu- human history, or Americans kinda growing up.But it was, like, a million, and then you had the Doctor Evil, "Why make billions when we can make 1000000?"And now we're talking 1000000000000.Yeah.Honestly, theit sounds surreal.It sounds kinda fake.Right.Right?It does.Well, what blew my mind about this was, and, uh, we'll talk about this more at scale lately, and I might be jumping ahead here, but the total US stock market is $48 1000000000000.Yeah.The total sum of the IPOs that we're talking about on the docket is right around $3 to $4 trillion if you were to total up, like, all these IPOs that came out.So are we talking, likeSo OpenAI and Anthropic both- And Anthropic tooboth being about a 1000000 a trillion each?Yeah.So OpenAI is about a trillion, Anthropic 6 to 800000000000.No.Like, it's- It's assuming, like, 10 to 14 times- Just wanna-which is, which is crazy.It doesn't make much sense.But you're talking about companies that are going to make up a huge percentage of the overall S&P 500 when they come out.Well, that's another thing, right?So when theseIf SpaceX debuts and it's a trilliondollar company, and it maintains that valuation, which I don't think it will, I think at some point- Yeahit'll probably dip down, but whatever.Not investment advice.This is not a prediction.Yeah.Um, I, I think about this event and all the various different ripples and, and impacts it's gonna have, including the fact that whether you buy that IPO or not, it's more than likely that a year from now you're gonna have an investment in it- Well-as long as you have an S&P, S&P 500 index fund or anything that's diversified like that.Yeah, you basically can't avoid it.I mean, 53% of all US stock market investments are done through passive investing at this point in time, whether- Mm-hmmit's index funds or just an S&P 500 mutual fund.Right.Or a target date fund.Yeah.So if that's the case, and if these 3 IPOs come out, they're going to make up 7% of the overall stock market- Mmessentially.And if that's the case, you can't not own them.Yeah.Now, you have-- there's, like, certain stipulations, like a, a, a public company has to show, like, a year's worth of financials and be profitable- Uh-huhin order to get into the S&P 500.So I think that one of-- when we were, I'm not gonna spoil any of the fun numbers later on, but when we were digging into the success of some of the IPOs of the past, like, one of the differentiators, 1, one of the variables that was most important was whether it was a profitable company- Mmcoming into the IPO.And I think what's kinda tricky with, with SpaceX is the fact that it's, like, right now it's, like, 2 different companies, and then kinda three, and then kinda 4.Because I'm sure- Yeahthe, the, the, the scuttlebutt is essentially that Tesla will be absorbed into SpaceX, and it will all be one company.Well, that's the big question.And so you have SpaceX, which is obviously the rockets, then you also have- StarlinkStarlink.Yep, I almost said Datalink.Starlink, and then what's the third one?xAI.xAI.That's what it is.Yep.Yeah, yeah, yeah.Okay.Yep.And then, of course, Tesla already absorbed a solar company, right?So, like- Right, yeah, for solarthere's a lot of different arms to the business.Which is not a bad thing, but- Nolike, when you track just SpaceX right now, what's profitable, Starlink is massively profitable.xAI is not because no AI company is really, like, making money right now.No, it's just all a spend.Right.And so then there's the rockets, right?And how profitable kinda, like, that section of the business is.And that's a big question mark.That's a very big question mark in my mind.Yeah.Um, but I just said xAI is unprofitable because AI is just, like, a massive spend.Is OpenAI gonna be profitable?Is Anthropic gonna be profitable?I don't know.I doubt it.Yeah.Do, do you know, you might be gonna get into this later, I don't, I don't know what you have in store for me.But do you know the largest IPO in history?I do.It was Aramco.It was Aramco.Yeah.Yeah.And that was so, it was $1.7 1000000000000 YeahI think was the valuation for that when that came out.Was it that high?I think it was that high.Wow.Yeah, but it was also making, like, several hundred billion dollars a year in, you know, output.Like, it was so profitable that it justified the IPO price.But that was also not S&P.I mean, that wasn't- Rightlisted in the New York Stock Exchange or- No, it wasn'tYeah.And it was the largest one because it kinda deserved the valuation, a lot of people would argue.And, I mean, on top of that, it was basically backed up by a country.You know, you're investing in a country at that point.But these, we're talking about such high valuations.Yeah.SpaceX is debatably profitable.It's- Debatably, and I- It's debatably, you knowand I misspoke earlier 'cause I said 650 1000000000, but I think it's 350 billion in, in private valuation right now.Yeah.So we're looking to triple that.We are.That's nuts.I know, it is insane.Okay, I don't know.It, it's gonna be very interesting to see where this all pans out, but long story short, it is, I think, um, in just in comparison, Facebook was the largest tech IPO to have ever come out.Mm-hmm.You know, in his, I think it was 2012.Well, there's Alibaba too, which was massive.Oh, Alibaba.Yep, yep, yep.Yeah.But I think IPO when that came out, that was like 120 1000000000.Yeah.So we're talking companies that are over 10 times the size of Facebook in terms of IPO valuation.Yeah.So okay, so SpaceX, let's say that they, the rumor is June is when we'll see SpaceX go public.Right.Right?So SpaceX goes public.What happens right off the bat?You and I have an opportunity, you and I and everybody else who's an individual public investor- Mm-hmmhas the opportunity to buy the stock, and they have a choice to make.Do I buy it or do I not?You also could just ignore the whole situation and just continue being passive.But outside of just the, the public investors and the impact on that one little decision, there's the fact that they're gonna be forced buyers within a year probably.Because of passive investing.Because of passive investing.There's the liquidity that comes into the market from everybody who's selling.Mm-hmm.Right?They're, they've been private, and now they get that liquidity.And then if you're going toLet's, so we're going from a $350 bi- billion valuation to a trillion, let's say, or 1.2, 1.3, 1.7 maybe.Where's all that money come from?Well, it has to get sold from somewhere else.Right.Or it comes from cash on the sidelines, maybe.That's possible, too.It could come from the fixed income market.But it's a lot of cash on the sidelines.It's a lot of fixed income.It's lotLet's say that you're an investor and you're excited to buy SpaceX, but you're fully invested.What do you sell to buy SpaceX?Well, the other thing too is that if this is going to come a lot from passive, it can't necessarily come from cash on the sidelines.It has to get reallocated from stocks that are already in the index at that point.'Cause it's not like S&P has- Rightyou know, billions of dollars on the sideline.It's just an index that tracks and diversifies.And then on top of that, if we have another, let's say 3 to four trillion dollars coming into the index at that point, the concentration then also picks up at the top.Now we're talking over 40 percent concentration in the top ten stocks, too.So it would have to get pulled out of somewhere.Well, and the S&P wouldn't decide to decrease concentration.They're just going to reward the largest company for being the largest company.Right, 'cause it's a momentum play.Right.But if you're an individual investor, and let's say that, like, you're an individual love-- investor who loves Elon Musk, and you're probably a little heavy in Tesla because of it.Absolutely.Well, now are you going to beYou have 2 choices in that situation.You can either buy SpaceX and hold Tesla and have even more Elon Musk exposure- Exposure, yeah.Or you can say, "Well, I, I want Elon Musk exposure, but maybe I want it in SpaceX and not Tesla."Like, is this a risk to Tesla stock?It could be, but at the same time, I would argue that they're very different companies.Oh, they're definitely very different companies.You know?So it's -- I, I get that Elon Musk runs both of them, but the revenue streams are detached for now.For now, yeah, until they're not.Right.For me, I would love a piece of Starlink.That, to me, has so much potential- Rightout there right now.I'm sure the rockets have a lot of potential, too, but I just don't know because it's not-- Like, you just don't know.It's a big question mark at the moment.Well, Dan and I were talking about this yesterday 'cause he was asking about Comcast.Hmm.And I said, "Dan, go back to the corner."But, I mean, if you're thinking about broadband right now, like, 'cause that's the, you know, the, the big build-out at the, the turn of the century with, like, infrastructure for internet was broadband build-out.Mm-hmm.And we, and never, we never used any of it, or didn't use most of it, right?There was a ton of just, like, dark fiber out there that- Of coursenever got used, right?Yeah.We laid all this fiber.Now everything's above us, right?You have Starlink up there in space.You have Amazon doing their own Starlink type- Yeahthing now because they just bought, I forget which company it was they bought.Is that the new race?Like, is itAre weIt makes sense.If you think about it, we've been going more and more wireless in life.Of course.Right?And yet we, like, still rely on fiber cable to, like, provide that wireless feed.Will we just be, be relying on a satellite network to do the same thing?I mean, I can say building a new house, I had to pay a pretty significant, I haven't done it yet because I'm actually considering going with Starlink.Yeah.But I have to pay a pretty significant amount of money to run the cable up the driveway to my house and connect it.So it's not like a, a free service necessarily, versus I can just pay Starlink- Yeahand just have a little portal- Yeahon my house somewhere, and it's now 35 bucks a month.Is it really?I just got pushed a thing.35 bucks a month.Wow.For, like, a, like a- I think it's a promotional rate.Yeah, like a period of time.Yeah, but still, I mean, that's not bad- Yeahfor, that's actually very cheap for solid internet.I just, like, paid 85 for my new promotional deal with Comcast.Right.So that's the thing, and then on top of that, I mean, there's no reason why at some point Starlink couldn't also move into cell phones.Yeah.fair.You know, unlimited service everywhere.Yeah.Do you know where the X comes from for SpaceX?Is it like Apple with the I?No.Uh, um, Elon had X.com way back in the nineties, which became PayPal.So X has been a part of this guy- Really?For years, yeah.And now it's actually X, which was Twitter.And now it's, now it's Twitter.He's just, the guy can't, he can't get away from it.Like, he really loves X.There's some sort of psychology behind that.Well, that's a crazy domain name to get.That's true.X.com.There's a lot of value in that.Yeah.That was probably, like, a start.He probably bought the domain name, and then he was like, "What, what can I do with this?"Uh.I'll just apply it.Just put it everywhere.Yeah, rinse and repeat.I think of, I think of SpaceX as this potential, like, massive value, like, just like vacuum of liquidity.Like, it's just gonna suck up all the liquidity in the market.Yep.Because that's a lot of, that's a lot of valuation that you're adding to the total stock market all in one day.Yeah.Right?And I think theoretically, that could have some ripple effects on other stocks that are owned, could also be bonds, to your point, or it could be just money market funds.Like, it c- something is going to be sold in order to buy this stock, and then it will happen again, perhaps with OpenAI, with Anthropic.We're not even talking about Stripe, but Stripe is one of the, like, largest private equity, uh, investments out there that has been private for so long, and they're just waiting in the wings to figure out the right time to go public.Yeah.Well, if you go back to 2021 was the biggest year in IPO history.There were more companies that IPO'd in 2021 than ever before, and the total market cap, market value of all those companies that IPO'd in 20 21totaled up to 900000000000.Yeah.So we're talkingAnd that was over one thousand companies.Yeah.So I think it was, like, one thousand and twenty companies IPO'd in 20 21.Now we're talking 3 companies have 3 times the market cap than over a thousand companies that IPO'd in 20 21.Yeah.Well, I mean, are you paying for quality?Right?Like- That's the questionthat 2021 vintage, let's look at it.2021 vintage, the worst vintage in my sample.Vintage being like wine.Sure.Right?You're with me.So you're talking, like, market basket- Yeahlow shelf.IPOs that debuted during a certain period.So, for example- Like a Moscato, like, something that's just sugar.This is boxed wine at Trader Joe's.Trader Joe's has some good wine.I know, but the boxed wine.Whatever.Okay.A bad vintage.Fine.You know what?Everybody loves their Trader Jose's until they have something different.We're talking gas station wine.Okay.wine.Here's the gas station- Is that a thing?wine of IPOs.I don't think so.I don't know if you can buy wine at gas stations.I gotta tell you, actually, in the cra- in the craft beer world, gas station beer is really good stuff.Like, there's, like, you find really good craft beer in gas stations in Vermont.Well, there you go.So anyways.Yeah, but you're in Vermont.2020 Shut up.I love Vermont.Okay.Uh, the Zerp bubble, 20 21, the worst vintage, near universal failure.90 percent decline.Coinbase, 85 percent decline.Robinhood, 82 percent decline.UiPath.Do you know what UiPath is?Never heard of it.Logistics.It's AI logistics.It still sucks.83 percent decline.Bumble.Bumble.Oh my God, I forgot about that.Bumble not good.There was something called Amplitude.Pretty much all my friends, that's where their, their paychecks are going, from sports betting.And sports betting.I know a lot of stocks.I've never heard of Amplitude.Um, nope.Down 80 percent, whatever it is.All right.So you compare that to, like, 2002 to 2006, had, uh, Google, Salesforce, Mastercard, right?Chipotle IPO.2007 to 2009, even during the financial crisis, Visa IPO'd and Lululemon IPO'd, and neither of them dipped below their IPO price.Hit us with a fun fact about companies that have IPO'd and been positive.So we did some research on this.It was fun.The parameters were this: uh, since 2 1000 Yepcompanies with a minimum one hundred million dollar market cap at th- at listing at the time of- So no penny stocks.No, no, no.There were no thousands of IPOs.It's just like- Yesthere's a, there's a bar of entry.Yep.Area of entry.No SPACs allowed, so no WeWork, no Chamath Palihapitiya SPACs, SPAC king guy.And, uh, we're only looking at closing price.So with those metrics, a hundred and fourteen notable, notable IPOs on the list.Okay?So from two thousand to now, hundred million dollar market cap and up, hundred and fourteen companies.Um, and then we looked at their performance through, uh, last year, through 20 25.How many of those one hundred and fourteen IPOs stayed at or above the value that they debuted at, meaning that they did not drop below their debut value at any time on a closing price.It may be intraday, maybe like at, 12 o'clock on the third day of their IPO they might have, butOkay.So basically what we're saying is from two thousand to now, which companies remained positive after IPO?That's correct.Okay.And never, never fell below.That IPO price.So basically it was a profitable investment from the get-go.Yeah.Now, if you expand this universe to, like, all IPOs in the US stock market, the likelihood that it would fall below IPO price was, like, 85 percent.It was high.If you have this hundred million dollar market cap parameter on there, it's like a 5050 shot that it doesn't fall below its IPO price.At open.Well, no, not at open, ever.Ever.Meaning like, so SpaceX debuts and, you know, I call you up and say, "Colin, should I buy SpaceX?"And you're like, "I don't know.Maybe today, maybe tomorrow, maybe there'll be a better time down the road."There's a fifty percent chance that there will be a better time to buy that than the day that it IPOs.Okay.All right?It's actually 53 percent chance- Okaythat it'd be better.So-Some of the names that have never fallen below their IPO price, so Google, Mastercard, Chipotle, Visa.Chipotle, really?Chipotle still-- Chipotle, w- even with the salmonella thing- Yeahnever fell below its IPO price.I would've thought it would've dipped with the salmonella thing.Shopify, CrowdStrike, Datadog somehow didn't fall below its IPO price, and then- Wow, that's shocking to me.Yeah, got all over the place.But what's interesting to me is the sectors that have done the best, right?So sectors of the stock market.Right?If you debuted as a cybersecurity company, there have been 8 of those since 2000, none of them fell below their IPO price.So that's great.Above a hundred million market cap.Yeah.Wow.Yep.Um, if you're a consumer staple or consumers just in general, consumer discretionary, more likely to drop below 60 percent of those have dropped below their IPO price.Wow.So names like, let's call it Peloton, Rivian, Poshmark, Blue Apron, Stitch Fix.Blue Apron, forgot about them.A lot of those were in that kind of like 2020 one vintage era that we were talking about.Yeah, that didn't do so hot.Some of them were pre-that, but then they just, you know, they got so inflated during the COVID run-up thatAnyways, financial services, not so good.Healthcare, not so good.Industrial, there's only one name that qualified to even make this list.It was, uh, TransDigm, which, don't worry, you don't need to know about that one.SaaS is pretty good, 80 percent.Oh, wow.Um, so what is SpaceX?I could argue it's consumer.I would say that- Yeahthere's a chance that it's consumer, right?'Cause we literally just said that Starlink is their most profitable division.X is a part of it, though.So- XAI?XAI, so it could be SaaS.Well, is it, thoughOkay, so there's-- let's talk about OpenAI and Anthropic.The biggest difference between those 2 Mm-hmmis OpenAI is basically straight to consumer.Right.And Anthropic is enterprise.Right, enterprise level.What is XAI?I don't know.Is it the-- Who uses-- I don't know anybody that uses Groq, I gotta tell you.I don't, I don't- Neither do Ihonestly, no idea.No.I actually do know one person, and he's a doctor, and he is very, very conservative.Okay.Oh, like, just like that's his tilt, so then- That's his thing.Yeah, yeah, yeah.So he just leans into it.Yeah.Out of all the people I know, that is the only one.Yeah.I feel like it's consumer-facing.So let's say that XAI is consumer, and let's say that Starlink is consumer.But you have the rockets.Rockets are very much a consumer- And Starlink are also-- Starlink can also be enterprise.Uh, it could be.Yeah.You know?I don't know how much of their revenue comes from enterprise solutions.But it's also government.There's that too, so there's government contracts, uh, temporarily.Yes.I guess the question is, like, where do they fall in this category?Um, I would say that you could look at it either way, that maybe it's, it's not cybersecurity, so you could say it's somewhere between tech, enterprise, SaaS- Yeahand consumer.And- What would you say Comcast is?Well- People have it as a utility.Well, that'sBut it'sYeah, 'cause it's both, uh, enterprise with like- Yeahwhat we have for our internet, um, at the office here, but it's also what Dan was bringing up was that it's Peacock, right?It is.It's like, it's a streaming platform that he's telling me is becoming more popular.I, I don't know if I believe him, but, um- Peacock?Yeah, Peacock.We actually watch Peacock a lot.That's exactlyI think this office watches too much Peacock.That's, that's the problem.So what I was saying to Dan is that I feel like there's no, like, brand value necessarily toLike, I understand that Below Deck has, like, different variations.Kardashians, Bravo's.Trader or Traders.Kardashians are their own thing now, but they were E!.They're Hulu now.Whatever it is.Yeah.I don't think it's-- I don't think Peacock is exactly Netflix caliber.No, agreed.Um, and by the way, that, that stock has been just demolished.Yeah.So, so bad.We'll gloss over that.Not investment advice.Yeah.But I wouldn't buy it myself.So I think the, the point here is that the likelihood, it's, it's really, it's uncertain whether or not SpaceX will be one of those names that goes, you know, and soars and never goes below its IPO price or, you know, it's maybe a little bit higher, the likelihood that it would fall below its IPO price.But either way, the second derivative effects of this are really interesting, and we talked about, like, all the liquidity that gets vacuumed up from the stock market- Mm-hmmright?What you have to sell in order to buy SpaceX, and then- Rightwhat you're forced to sell inside your index a year later to buy SpaceX.But there's also all the money that is being, I don't wanna say generated, but if you, if you have a three hundred and fifty billion dollar company, and you, Colin Walker, own a percentage of this, which I'm sorry, unfortunately you don't.No, I know.Not yet.Not yet.But you own it as a private investor, and then your investment in that, let's say triples, right?Easily, yeah.Then you have all that extra money, your net worth has certainly increased, and you could argue that there's a, uh- I'll redistribute and redeploy.You could redistribute and re-redeploy.Not everybody will.Some people- Yeahbut let's say now you have a choice.You just tripled your money on SpaceX because it was a private credit company or private equity company.Like, that was a special opportunity for you.Do you then go look for a similar opportunity, or do you put that into the public markets?Well, I'll tell you one thing I wouldn't do, is I wouldn't sell it- Okaybecause I wouldn't wanna pay the capital gains tax.Ooh, okay.All right.Tell us about that.I would probably, I would probably take a loan against it, or I would do some sort of long-short straddle with a call put option, something like that is what I would do personally.Yeah.Because I wouldn't wanna get hit with that tax right away.I would look to diversify out of it, but this is the famous Apple CEO salary of one dollar, and, you know, Tim Cook is pretty much paid predominantly in stock at this point in time- YeahApple stock.So extremely low tax rate because they take the stock, they put it in an account, and they usually don't sell it.They will take a loan against it, or they'll use some sort of strategy to slowly trim out of it over time while maintaining low taxes.So that's probably what I would do, but I would take that profit and most likely redistribute it or try to aim for some diversification.But I remember, I think it was Mark Cuban famously said, like, "Diversification is for the weak."Yeah.You know?It was just like all, all, like, major wealth is made through concentration.Yeah.But at that point in time, I think Elon Musk will probably, if this does IPO for the valuations that they're talking about here, will probably be the first trillionaire in history, most likely.Yeah.You know, we'll see how it pans out, but- Depending on what pay package he gets approved by some court.Like- Correct.But yeah, I mean, look- But, like, he doesn'tLike, I, I really don't think he cares about the money at all.I mean, if you look at him, like, he has very modest houses.He's not a flashy guy.Like, I just think he does it 'cause he likes business and he has his own goals, but if it was me personally, I would tied up in a single company.Yeah, I mean, there's a, a large gap of decision-making between, like, us and Elon Musk, right?Like it- Absolutely.I can't-the type of decisions- I can't pretend to relate to someone that has hundreds of billions of dollars at their disposal.Yeah.But you bring up a good point because first of all, there's the period of time where there's gonna be a lockup, and you're not gonna be able to get out of it right away anyways.Totally.Yeah.Um, so, you know, at the IPO, like, after that, there's gonna be, depending on when you received your equity and when you continue to receive it, like, there's gonna be opportunities to get out of it, but they're not gonna be all at once.So there's also, to your point, how you can leverage that, right?Because you can tap into that value without having to sell, and that can prop up the value of the company because nobody's selling it- Rightwhich is great, um, and still provide liquidity there before.It's just now it's a bank's liquidity that you're taking and borrowing.Shouts to the fixed income market- Yeahin a lot of ways, but yeah.There's just, there's no, there's no way where this exists in a vacuum, right?There's some sort of impact that we're all going to experience from this, and I wonder about how much support in the market there is for this because if we see SpaceX debut, and it's a great IPO, right?And then, like, Anthropic and OpenAI and Stripe, and those are all great IPOs, that's, that's a lot, to your point, of, of liquidity that we need to pull into the market just to support those names.It's 7 percent of the total value of the- Yeahstock market.But then other companies are gonna follow.There was a company yesterday that IPO'd, can't remember what it was now, and it was, like, the largest IPO of, of the year.I hadn't heard of it.IPOs, they come in waves.Like, when there are good market, financial market conditions, there'll be a bunch of IPOs, and then, like, the last IPO will be a kind of a loss, not a loss, but just w- it won't generate what they were hoping for, and everybody realizes that that market is dried up and then, you know, you have to wait for the right opportunity again.How much can we support this type of environment, right?If we have, let's say that it's June and we still are dealing with a Iran war or Strait of Hormuz backup or whatever it might be.Yeah.And we have, at the same time, a new Fed chair, which historically the Fed chair, a new Fed chair is always tested, quote unquote, by the market.Yeah.Quite early.Right?You still have inflation high.You still have the AI risk.You still have private credit risk.Mm-hmm.Like, there's a lot of, like, I wouldn't call them cracks in the markets, but there are a lot of little warning signs- Yellow flagspeople point to, yellow flags.Yep.Um, so how much of this can we support?Like, how much can the market prop up all these new companies, new valuations?Well, I don't know, because concentration is something that we've talked about before.And, you know, to go from 30 percent of the market being in the top ten companies to now you're at over 40 Yeahwith these IPOs if they come out at the valuations that we've been talking about, that's a pretty sizable increase in terms of concentration at the very top, esspec-specifically, in basically one sector- Mm-hmmdepending on how you classify SpaceX.So that's a little scary to me.The other thing that I'm curious about is as more and more money kind of flows in and the valuations become bigger and bigger, the bond market has always been historically larger than the stock market- Mm-hmmby a significant margin.I think the stock market's around, like, 48 trillion, and I think the bond market's around, like, 55 to 59000000000000.Mm-hmm.So you have, like, ten to 12 more billion dollars at any given time in the bond market, but if more and more companies are starting to come in to, I'll say, the US stock market, is that ever going to get to a point, I wonder, where they're at an even playing field because I'll say most people in most 401investments, most savings in the stock market at this point are going into passive things.Right.I'm looking at my phone right now because I was just sending out an email this morning about private credit, and I had the numbers of how much is in all of the various sectors that you're, or the various investments that you're talking about.So US investment grade bond market is roughly 10000000000000.Yep.Uh, fixed income exceeds 50000000000000.Yep, makes sense.All right, so it's fifty trillion in fixed income.Mortgages are 12000000000000.Right?So we have twelve trillion dollars in mortgages in this country.Again, thinking about how much a trillion is and how many houses there are in this country, like how leveraged are we?That'd be a fun exercise to see how much leverage- That would be a fun exercisethere is per house- Probably a lotin this country.It's a lot.I was thinking about theI was going down, I was going down a Colin-type rabbit hole.This was about sovereign funds, and- And I love this topicright?And there are some c-countries that have sovereign funds because they have some nation-state wealth that could totally destroy the inflation, the inflationary or lack of inflationary environment that they carry, so like Norway, for example, right?I was asking, like, why don't we have a sovereign fund?Like, why doesn't the US haveLike, we have all this wealth in this country.Why don't we have a sovereign fund?Did you know that fun fact, a lot of, I think it was France's sovereign fund was invested in the Bernie Madoff fund?Jeez.Yeah.Yeah.There was, like, a lot of very, very wealthy royal people- Rightthat lost a huge chunk of their money in the Bernie Madoff thing because of, you know, sovereign funds.Well, there are a lot of sovereign funds that are invested in SpaceX, and a lot of our, like, larger companies.Lucid.Right.Yeah.Lucid.Yeah.Jeez, Lucid.Bad IPO, Lucid.Yeah.Um, consumer- Yeahconsumer discretionary right there.Yeah.Or tech.You could put it either way.Right.So we don't have a sovereign fund, I guess because we don't need it.We're kind of the, we're the reserve currency, and, like, we get to, everybody else borrows our money and then pays us back, blah, blah, blah.And I was just thinking about, like, all of this wealth, and I'm like, well, couldn't we turn some of this wealth or technology into a sovereign fund?And the end result was you need to have a surplus in order to have a sovereign fund.Mm.And I was like, oh, what's a surplus?What is that?Plus, what is that word?I'm American, but it's, you know, some of the money that, you know, comes into this market is gonna be, to your point that you were making earlier, just, like, leveraged, right?It's gonna be- It has to be.Yeah.It's gonna be liquidity that's created kind of like fugazi, fugazi, like thin air stuff.Yeah.I, I, thinking about this and what my strategy would be and knowing how, like, a lot of super wealthy people kind of manage their money, I know that this has to be leveraged- Yeahin some way or another because there's no way that someone's going to liquidate something of that size and magnitude so quickly- Yeahand pay those gains.Yeah.So I don't know if you have to have conviction.You just need to have a tax strategy.Just need to have a tax strategy, and you need to have patience.Yeah.I, um, I think it's a, it's gonna be really fun to see, and I anticipate we're gonna have a lot of phone calls about this, and I'm gonna advise patience more than anything else.Yeah.I think that's the only thing you can do, because how can you make a decision based off of no information pretty much?Right.Right.Yeah.Cool.Let's wrap it up.Um, final thoughts, Colin?I think passive investing has become so big for a reason.Yeah, so you don't have to make these decisions.So you don't have to make these decisions.I'm not saying that making these decisions is a bad thing, but what was the stat about, um, you know, when Ford Motor Company IPO'd and the percentage of com- percentage of people that own stocks I think was like 4 to 6 percent- Yeahof the populace.Now I believe 62 percent of Americans own stock in one way or another, whether it's through- Yeah4 oh one Ks or, you know, IRAs or individual Robin Hood accounts, whatever it might be.Yep.So we've gone from 4 to 6 percent of the population to 62 percent of the population.Yep.And that will probably continue to grow- Yepwhich is not a bad thing because you're participating in the markets and compounding interest and plug for the podcast.Yeah.And all that good stuff, compound growth.Personally for me, I think investing in IPOs can be a bit of a dice roll.I think it's the best way to explain it, is that it isit's there are no sure things in any investment, um, but investing in a company that doesn't have a public track record to me is a little bit of like you're throwing caution to the wind to a degree.And there's some sort of FOMO in that.The Ford thing is interesting.This is a fun fact straight from the horse's mouth.Elon Musk shared this.There are 2 American automobile com- companies that never went bust, everyone bankrupt, Ford and Tesla.That's great.But the Ford, the Ford, um, comparison is the one that we were looking at earlier.Like, when Ford went public, it was one to 2 percent of the total market at the time as regular Americans bought shares.But to your point, you were just making fewer Americans had exposure to the stock market.Now it matters.Now it matters, and your K will buy this stock- You're gonna own ityou know, down the road.I always think about this because the, the most important thing to take away from the progress we've made with our, our markets, I believe, is that they in- continue to increase in strength and durability because they continue to increase in importance in this country.And if you have K contributions every 2 weeks coming in to buy SpaceX, not intentionally necessarily, but just- Yeahis what it is.You know, these larger, these larger companies are going to continue to get this bid because as, as Josh Brown actually has called it, the relentless bid.It just always keeps coming until something changes, and I don't know what that would be.Yeah, I don't know, but I don't see it changing anytime soon.SpaceX could be the biggest and most important company in the world if it merges with Tesla.That's true.Right?Like what- I don't know of anything that's that size.Be fun to see.Fun to see.All right.Like, subscribe.Share with a friend.Comment.We are in a new stu-- Well, it's actually the same space, but we're redecorating.We are redecorating.So.So.More to come.Thank you everyone.Bye all.The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.Investment advice offered through Integrated Partners doing business as CoFi Advisors LLC, a registered investment advisor.Integrated Partners does not provide legal, tax, mortgage advice or services.Please consult your legal tax advisor regarding your specific situation.Past performance is no guarantee f- of future results.All investing involves risk, including loss of principal.No strategy assures success or protects against loss.The economic forecast set forth in this material may not develop as predicted, and there can be no guarantee that the strategies promoted will be successful.Compound Growth with Wheeler and Colin.Sponsored byCoFi Advisors.Reach out today.Yay