Follow the Money 6-15-26
Look out below! – We are living through one of the most exciting & treacherous, periods of world history. While the AI revolution is transforming our lives, unintended consequences will no doubt come into play, with not all of them positive. The “money” that this column follows is moving with an order of magnitude that is literally beyond belief. With SpaceX now worth over $2 trillion, Elon Musk is a trillionaire. For perspective, Jalen Brunson, earning only $30M or so, ignoring taxes, will require 33,000 years to make $1 trillion. By the way, US governmental interest expense in May annualized to $1.6 trillion, about 30% of total US Cash Receipts. That is likely just one reason that Central Banks have now made gold bullion their largest reserve asset, having just surpassed the US Dollar and the Euro.
Pertaining to the state of the US economy: According to Fred Hickey’s High-Tech Strategist, a group of eight companies (Nvidia, Micron, Broadcom, etc.) benefiting from the AI buildout accounted for 68-72% of the S&P 500 index Q1’26 earnings increase. Hickey believes that the $850B to be spent this year by the hyperscalers, with even more in ’27, is “massive malinvestment by egomaniacal billionaires…. who cannot achieve their goal of Artificial General Intelligence in the foreseeable future. The large language models provide unreliable information and regularly hallucinate, limiting usefulness to applications requiring high reliability like finance and medicine.” Hickey is not the only skeptic in terms of tangible returns on the Ai spending binge. Our layman’s contribution consists of an observation that “Garbage In provides Garbage Out”.
Relative to the state of the Capital Markets: We cannot help but wonder whether the $75B IPO for SpaceX, by far largest in history, along with the pending IPOs of Anthropic and OpenAI, with combined valuations over $3.6 trillion, will turn out to be the last and loudest of the ringing bells signaling deflation of the 40-year-old credit bubble. Since SpaceX came public at about 90 times Sales, we suggest that SpaceX stock will likely provide a more advantageous entry point at some point within the next couple of years. Fear Of Missing Out has obviously infected the investment community, but fevers break eventually, and it is normally not best to invest while in a feverish condition.
Relative to Gold, Bitcoin & Michael Saylor’s Company, Strategy, Inc. (MSTR): Gold, which you know that we consider, the “real money”, has taken a breather since peaking in February. After rising 60% in 2025, gold bullion is down a modest 3% in ‘26. Bitcoin, which we have never believed in, is down about 50% from its all-time high in late ’25 and down about 33% YTD in’26. Michael Saylor, CEO of a software company originally called Microstrategy, decided about five years ago that Bitcoin represented the monetary wave of the future, so he transitioned MSTR into a “Bitcoin Treasury Company”, using MSTR’s access to capital to fund Bitcoin accumulation. For almost all of the last five years MSTR stock has sold at a substantial premium to the value of its Bitcoin, so every stock sale and subsequent Bitcoin purchase was accretive in terms of Bitcoin/share. This worked until it didn’t, and MSTR today sells at a discount from its $64B worth of Bitcoin. John Hamburger and I sat together at the ICR Conference in January ’25, as Saylor told a standing room only audience that his capital compounding machine was everything any investor needed, Over beers that evening, with MSTR trading around $350/share, and Bitcoin at $100,000, we counseled a potential Bitcoin and/or MSTR buyer that “there is never standing room only at the bottom”. Today Bitcoin is around $63,000 and MSTR is around $120.
Investors in the restaurant industry are not immune from IPO fever or the Fear Of Missing Out. There have been eight IPOs in the six years since Covid. Only two are trading at premiums from their IPO prices, namely CAVA Group (CAVA) and Dutch Bros (BROS). The others have been dismal. Portillo’s (PTLO) is down from a high near $50 to under $5. TH International is under $2, down from a high near $30. Gen Restaurants (GENK) is under $2, down from a high of $20. Black Rock Coffee Bar (BRCB) is around $6, down from close to $30. Pinstripes (PNST) merged with a SPAC, traded at $8, is now bankrupt. Even First Watch (FWRG) a much-admired company and a stock that we own, trades at $11 five years after its IPO, down from the twenties. It is worth noting that the two winners as well, CAVA and Dutch Bros, have provided numerous buying opportunities once the IPO excitement abated.
Our last current recommendation is a book written by Charles Mackay. Within it, he provides descriptions of a large variety, over centuries, of popular delusions, crazes and mass follies. He examines economic bubbles, such as the infamous Tulipomania in the early 1800s, wherein Dutch tulips rocketed in value amid claims they could be substituted for actual currency. Extraordinary Popular Delusions and The Madness of Crowds was published in 1841. Enjoy!
Roger Lipton
