Published July 21, 2026

At a Glance

• SpaceX's IPO was this summer's most talked-about offering. OpenAI and Anthropic have both confidentially filed for public offerings. Additional marquee IPOs may be coming.
• An exciting company and an attractively priced stock are two different questions, and only one is something you control.
• Four questions worth asking before you buy an IPO — this one or the next one.

Few investments attract more attention than the initial public offering of a well-known private company.

SpaceX provided the latest example. The company priced its June IPO at $135 per share, and demand was intense. The stock rose sharply after trading began and then experienced a meaningful pullback, falling below the offering price by late July.

That early volatility is not a verdict on SpaceX's long-term prospects. It is a reminder that the price an investor pays matters. Investors who received shares at the offering price began in a materially different position from those who bought after public trading opened and the initial excitement had already lifted the stock.

OpenAI and Anthropic may create the next wave of IPO attention. Anthropic announced that it confidentially submitted a draft registration statement to the SEC in June, and OpenAI has reportedly done the same. Neither company has established an offering price or timetable. That uncertainty has not stopped investors from imagining what an allocation might be worth.

An Exciting Company and an Attractive Stock Are Different Questions

A company may have an extraordinary product, a large market and an impressive management team. Its stock can still disappoint if investors pay a price that already assumes years of exceptional growth.

This is particularly relevant for companies associated with transformative technologies. Investors are not merely evaluating the business as it exists today. They are paying for expectations about market share, future profitability and opportunities that may take years to develop.

The question is not simply whether SpaceX, OpenAI or Anthropic could become much larger businesses. It is how much of that possible success is already reflected in the price.

The First-Day Gain May Not Be Your Gain

IPO headlines often focus on the difference between the offering price and the first day's closing price. That can create the impression that the gain was broadly available.

It usually was not.

The offering-price return belongs to the investors who actually received an allocation. The most sought-after IPOs may be heavily oversubscribed, leaving investors with only a small allocation or none at all. Everyone else must decide whether to buy after trading begins, when the initial increase may already be reflected in the market price.

That distinction does not make an IPO allocation automatically attractive or a post-IPO purchase automatically unattractive. It means they are different decisions and should be evaluated separately.

The Historical Record Calls for Restraint

Some newly public companies become exceptional long-term investments. The challenge is identifying them in advance and paying a price that leaves room for the business to exceed expectations.

Research compiled by University of Florida professor Jay Ritter documents both the substantial average first-day gains associated with U.S. IPOs and their less impressive longer-term record. Studies have repeatedly found that IPOs as a group have tended to lag comparable public companies after their first day of trading.

The evidence does not tell us that every IPO will disappoint. It tells us that excitement, familiarity and a large first-day increase have not historically improved the odds for investors buying afterward.

Investing and Speculating Serve Different Purposes

Long-term investing begins with a financial objective. The portfolio is built around the investor's time horizon, cash-flow needs and ability to withstand market declines. Success should not depend on one company, one technology or one forecast being correct.

Speculation begins with a particular outcome: a company dominates a new industry, a technology develops as expected or other investors agree to pay a much higher price in the future.

There is nothing inherently wrong with making a speculative investment. Some investors can comfortably reserve a small portion of their assets for opportunities they find compelling. The important part is labeling the position correctly and sizing it so that a disappointing result would not alter the financial plan.

Four Questions to Ask Before Buying an IPO

1. Am I receiving the offering price or buying after trading begins? The potential return and downside can be very different once the first-day demand is reflected in the price.
2. What future does the valuation already assume? A compelling story is not enough. The company must eventually produce results that justify the price being paid.
3. Is this part of my investment strategy or a speculative position? A speculative holding should be deliberately sized rather than quietly allowed to become a core position.
4. What would happen if the stock declined by 50%? If that decline would affect spending plans, retirement security or the ability to stay disciplined, the position is probably too large.

You Do Not Have to Be First

Fear of missing out creates urgency. Investors can feel as though the opportunity will disappear if they do not buy immediately.

For a company capable of compounding its value over decades, the first day should not be the only opportunity. Waiting allows investors to review public financial statements, observe management's execution and see how the stock trades once the initial scarcity and excitement begin to normalize—and if you decide it is worth owning.

SpaceX's post-IPO volatility provided a useful reminder. OpenAI and Anthropic may provide the next one. The objective is not to avoid every new offering. It is to make sure that excitement does not replace valuation, diversification and position-size discipline.

There will always be another highly anticipated IPO. Your financial plan should not depend on correctly predicting which one reaches orbit.

Published July 7, 2026

At a Glance

• The market's best quarter since 2020. US large-cap stocks gained 14.9% in Q2 and finished the first half up 9.6% — powered by corporate earnings on pace to grow roughly 24% in 2026, not by the headlines.
• But the price of admission is rising. Stocks trade near 20 times next year's earnings (long-run average: about 17), and the ten largest companies make up roughly 40% of the index. The next correction will come — and no one can tell you when.
• History says: expect it, don't fear it. Since 1950, declines of 20% or more have arrived about every four and a half years, averaging over 30% — and every one has so far proven temporary. Your plan was built with exactly these episodes in mind.

I’m happy to report on the continued progress of our clients’ long-term plans through what has been a very eventful first half of 2026.

When I say “progress,” I don’t simply mean that account values rose — although they did. Even in stretches when markets decline, the things that matter most to long-term investors — the growing earnings and dividends of the companies we own, and steady movement toward the goals in your plan — can keep advancing. That distinction matters more right now than it usually does, for reasons I’ll explain below.

As always, I’ll start with the principles that guide everything we do, then turn to the half-year just past.

First, the principles that don’t change

• We are goal-focused and plan-driven. We invest over years and decades to fund the goals that matter to you and your family — retirement, education, legacy — not to outguess the market’s next move.
• The order of operations never changes: first we define your goals, then we build a plan for reaching them, and only then do we construct a portfolio suited to that plan.
• Unless your goals change, there’s no reason to change the plan. And if the plan stays in place, so — broadly speaking — does the portfolio.
• We don’t react to current events — economic, political, or geopolitical. Experience teaches that the economy can’t be consistently forecast, and the markets can’t be consistently timed.
• Because markets can’t be timed, we stay invested through “good” markets and “bad.” That is the price of admission for capturing the market’s full long-term return.

What just happened

There has rarely been a more eventful six-month stretch than the one just past. Consider the list: a major war in the Middle East, severe disruption in energy prices, stubborn inflation, the sudden threat of higher rather than lower interest rates, stock valuations near historic highs, extreme concentration in the broad market averages, a collapse in Bitcoin and the precious metals — and, by far, the biggest initial public offering in history, built around spacecraft, of all things. Did I leave anything out?

How would anyone go about making rational investment policy out of that maelstrom? The answer — as I suspect is intuitive to you by now — is that one doesn’t, because one can’t. And that is exactly why, at times like these, we can step back and almost welcome the chaos, for one compelling reason: it has nothing to do with us. We have your goals, your plan, and a portfolio aligned as closely with both as we know how to make it. Nothing on that list of headlines changes any of the three. (The SpaceX IPO — and IPO investing generally — deserves its own discussion; watch for a dedicated post later this month.)

Through all of it, the S&P 500 gained 14.9% in the second quarter — its best quarter since 2020 — and finished the first half up 9.6%, or 10.2% including dividends.

Meanwhile, those of us who see ourselves as long-term owners of and lenders to consistently superior businesses — as distinctly opposed to traders in “the stock market” — can only marvel at what those businesses have been doing. Their earnings have soared and are continuing to grow, with analysts currently estimating S&P 500 earnings growth of roughly 24% for 2026. Their profit margins are at all-time highs. And they keep raising their dividends, even as they invest in more innovation and the growth of their businesses. Over the long run, earnings — not news cycles — are what drive stock prices.

A word about froth

Even so, soaring earnings are only half of any investment story. The other half is the price investors pay for them — and that's where a word of caution is in order. The S&P 500 currently trades at roughly 20 times its expected earnings for the coming year — well above its long-run average of about 17 — and the ten largest companies now make up roughly 40% of the entire index, a level of concentration exceeding even the 2000 tech-bubble peak.

Add speculative enthusiasm running hot — from legalized gambling to prediction markets to trillion-dollar IPO dreams — and it is entirely reasonable to ask whether a meaningful market decline could be coming.

The honest answer is yes — this emotion-driven market can significantly, even savagely, correct at any moment. And if history is any guide, it will, probably when the consensus is least expecting it. What neither I nor anyone else can tell you is when. But history offers useful perspective.

The S&P 500 began 1950 at a level of 17. Today it stands near 7,500. Along the way, by one careful count, there have been 17 separate declines of at least 20% — roughly one every four and a half years — with the average decline exceeding 30%. Every one of them has, so far, proven temporary: the long advance eventually resumed and carried the market to new highs.

I draw two lessons from that record. First, significant declines are not a sign that something is broken. They are a normal, recurring feature of the very market that produced those extraordinary long-term returns — and a decline that washes out speculative excess can even leave the market’s advance on firmer footing. Second, because we know our ability to time such a decline is nil, we plan to ride it out, as we always have. Your financial plan was built with exactly these episodes in mind.

This is also where portfolio discipline earns its keep. In practice, we are very broadly diversified equity and fixed income investors, and we rebalance periodically — systematically trimming our exposure to richly valued areas of the market so we can increase our ownership in out-of-favor (and perhaps more reasonably valued) ones. It will not have escaped your notice that this is the opposite of what most investors do, especially at times like this: chasing the sectors that have already appreciated the most, in the apparent belief that they can only go up even more.

Closing thoughts

None of this is a prediction. Markets may keep climbing; they may correct next month. Our approach doesn’t depend on knowing which. It depends on your goals, your plan, and a portfolio aligned with both.

I’m here to respond to any and all questions and concerns you may have — about the markets, your plan, or anything in between. Thank you, as always, for the trust you place in TAGStone Capital. It is a privilege, and indeed a joy, to serve you.