Five minutes a week that makes you smarter and calmer about your own money — plus a look at what I’m actually doing with mine…
Morning. Eight weeks ago SpaceX floated on the stock market — the biggest flotation in history, briefly making Elon Musk the world’s first trillionaire. Last night it published its first results as a public company, and this morning the shares are worth about a third less than the price people paid in the day-one excitement.
Meanwhile the S&P 500 — five hundred companies doing ordinary things profitably — closed at another all-time high.
This week’s letter is about the gap between those two sentences…
THIS WEEK IN 30 SECONDS
SpaceX’s revenue nearly doubled to $7.8 billion — and the shares fell. There’s a lesson in that.
The Bank of England held rates at 3.75% — but three of the nine wanted a rise. Your savings and mortgage, below.
This week’s myth: “if you don’t get in early, you’ve missed it”. Warren Buffett would like a word with you…
THIS WEEK IN MONEY
SpaceX listed on 12 June at $135 a share and touched $176 in the first day’s frenzy. Last night it revealed its first ever results: revenue up 92% to $7.8 billion, comfortably ahead of forecasts. The shares fell anyway — around $111 as I write, down a third from that day-one peak.
The catch: SpaceX spent $18.4 billion in three months, most of it on AI — and from Thursday, the insiders who held shares before the float are finally allowed to sell.
What it means for you: get swept up in the excitement and lose a third of your money, even though the company nearly doubled its revenue! Hype means paying today for a decade of perfection that hasn’t happened yet.
The Bank did nothing — and that’s still a story
I promised I’d tell you what the Bank of England decided on Thursday. Answer: nothing. Rates stay at 3.75% for the fifth meeting running — and the surprise was that three of the nine voted for a rise, not a cut.
What it means for you: savers keep 3.75% a little longer — not that pitiful returns like that are any interest to TWL readers — we do a LOT better than that. Mortgage fixes have edged up to 5.62% on the average two-year deal, and the next decision isn’t until 17 September.
Meanwhile, the boring stuff hit records
Quietly, with no drama, the S&P 500 closed Tuesday at 7,737 — its first record high for two months, and the Dow topped 54,000 for the first time ever.
What it means for you: if you hold an S&P 500 or global tracker, that was your money working while you did something better with your evening.
WHAT I’M DOING
My portfolio’s on the site, updated this morning — every holding and how it’s doing: see the full portfolio →
No changes this week. But updating the site this morning was a pleasant job: four of the twenty positions on the Outsized Returns page are now up more than 40% since I bought them — the best is up 65% — and one healthcare holding has gone from underwater to up 22% in the last three weeks.
The foundation fund is up 82% since I opened it in May 2023, 23% of that in the last year alone.
Which four are up more than 40%? That’s the bit that’s for paid members — the names, what I paid, and why I bought each one when nobody wanted them. Free readers get my thinking. Paid members get my actual holdings and my numbers.
ONE THING WORTH UNDERSTANDING
It looks like a glitch: revenue up 92%, shares down. It isn’t. It’s the most normal thing in markets, and understanding it will save you a lot of confusion.
A share price isn’t a mark out of ten for how the company did. It’s a bet on what the company does next — and the bet was placed months ago. When SpaceX floated at $135, that price already assumed spectacular growth for years to come. So spectacular growth arrived, and it wasn’t news. What was news was the spending. The results didn’t have to be bad to disappoint; they just had to be less perfect than the price demanded.
Good company, wrong price is still a losing trade.
There are two ways round this. Pay for perfection and hope it shows up — or buy when expectations are already on the floor, so ordinary news counts as a pleasant surprise. The second one is my entire approach to stock-picking, and it’s why I’ve never bought a share in the week it was famous.
MONEY MYTH OF THE WEEK
“If you don’t get in early, you’ve missed it”
This is the fear that sells every hyped flotation: get in now or watch from the platform as the rocket leaves. Eight weeks of SpaceX trading shows what that fear is worth.
Here’s the record of the greatest investor alive. Warren Buffett didn’t buy a single Apple share until 2016. He put in about $36 billion and made over $120 billion, the most profitable investment of his career.
He missed the IPO, the iPod, the iPhone launch and three decades of headlines, and it cost him nothing that mattered — because a great company gives you years of chances to buy it.
If SpaceX turns out to be a great business, you’ll be able to buy it next year, and the year after, and the decade after that. If it doesn’t, congratulations — you just saved a third of your money by doing nothing.
JARGON, DECODED
After-hours trading — US markets close at 9pm UK time, and companies usually publish results just after the bell, so the first reaction happens in thin “after-hours” trading among professionals and night owls. That’s how SpaceX could close Tuesday up 9%, then be down 11% before Wednesday’s breakfast. Prices can gap violently overnight and open somewhere new entirely — one more reason results week is a spectator sport for sensible investors, not a trading opportunity.
READ OF THE WEEK
The Little Book of Common Sense Investing, John C. Bogle — the man who invented the index fund explains, in an afternoon’s read, why the boring approach beats the exciting one.
Warren Buffett’s instruction for the money he leaves his wife: put it in an index fund.
This little book is why.
BEFORE YOU GO
If you have any questions, drop me a line — just reply to this email. I read every one.
If this was useful, forward it to one person who’s been eyeing a famous share and wondering if it’s too late…
See you next week.
Tim
P.S. SpaceX isn’t in the S&P 500, and can’t be yet — the index’s rules require a company to be profitable before it gets in. A $1.5 trillion company, turned away at the door by the world’s most boring bouncer. How companies get into the index — and get thrown out — is a story for another week.
I am not a financial adviser. Nothing here is personal financial advice. Please do your own research before making any investment decisions.