By Stephen Leeb, Ph.D., and Megan Davis
SpaceX is going public tomorrow in the biggest initial public offering (IPO) in history. It will be followed shortly by the IPOs of Anthropic and OpenAI. While you’re watching the NBA finals and the World Cup, these companies are rewriting the rules of the stock market game for everyone.
NASDAQ, FTSE Russell, and MSCI all changed their requirements so as to fast-track these forthcoming IPOs. The S&P 500, to its credit, did not. It continues to mandate a one-year “seasoning” period before a company can be considered for inclusion.
But if you’re invested in any of the other indexes, for example, if you have a 401(k) that invests in technology-based index funds, within a mere few weeks you’ll have a stake in SpaceX. NASDAQ has shortened its seasoning period to only 15 days, while FTSE Russell introduced a new fast-entry rule that slashed its waiting period to five trading days. MSCI waived its standard waiting period and float requirements to fast-track large companies in as little as 10 trading days.
Why should this concern you? Because history shows us that large IPOs can experience a fast fall. After racing out of the gate thanks to hype and aggressive initial valuations, they often decline sharply within the following year. Notably, the three AI companies currently in the pipeline already have sold significant shares through private funding rounds. Historically, companies went public early to allow the public to capture the gains of their growth phase. But a good look at the books of these three AI companies reveals stretched valuations that leave less meat on the bone for the public. In other words, much of the money to be made in SpaceX will be claimed not by the people who buy in on Friday, but by the investors and insiders that already own shares.
These insiders are counting on the new index rules to allow your retirement funds and 401(k)s to provide the companies with enough money to pay off their debt. All three companies have yet to prove they can turn a profit. But eliminating or reducing debt won’t ensure they can make money. It wouldn’t be surprising to see these same companies come back, hat in hand, and offer more stock to an unknowing public.
The ultimate irony is that these specific companies are producing the very products that are costing people their jobs. As AI continues to result in massive layoffs, there will eventually be no retirement funds or 401(k)s left to buy in these companies’ stocks. Maybe that’s why all seem to be racing to go public now. Maybe that’s why we are seeing the indexes change their rules to allow what could become a massive rug pull. They are simultaneously diminishing consumer purchasing power and market participation while relying on that same participation to bail them out. But the window for pulling off this hat trick is closing.
Henry Ford famously gave all of his employees a raise so that they could buy his cars. He made headlines by doubling the daily wage from $2.50 to $5, transforming his labor force into active consumers who could afford the Model T automobiles they were manufacturing. He understood that he could not make a profit unless people could afford to buy what he was selling.
You don’t have to know a thing about economics to realize that ensuring that the purchasing power of workers keeps up with inflation is what allows those workers to buy goods and services. The U.S. has already been treading water in this regard. Multiple studies from organizations ranging from the National Association of Home Builders to the American Enterprise Institute have shown that most workers today cannot afford to purchase a home. Brookings released a report on middle-class families, “one-third of which struggle to afford basic necessities such as food, housing, and childcare.”
If workers no longer have money to contribute to their 401(k)s or retirement funds, nothing will be left to power the stock indexes. And, if current trends persist, the companies won’t be able to tap the bond market either, because interest rates, already high and rising, will be unaffordable to AI companies whose need for additional capital will assure unfavorable credit ratings and unaffordable interest payments.
The forthcoming IPOs are generating a ton of buzz and hype. But as they make some already very wealthy people even wealthier, they are piling on the risk to an already very risky market.
A Pope’s On-Point Message
On May 15, Pope Leo XIV released his first encyclical, entitled Magnifica Humanitas, with the subtitle On Safeguarding the Human Person in the Time of Artificial Intelligence. In addition to calling for artificial intelligence to be “disarmed” from military and economic domination, and insisting that algorithms must always serve human dignity, the Pope advocated for just laws and protections for workers replaced by AI so that AI serves the common good.
It’s not the first time a Pope has interceded in an economy undergoing wrenching changes. In 1891, Pope Leo XIII addressed the Industrial Revolution in much the same way, responding to the exploitation of the working class and laying the foundations for modern Catholic social teaching by advocating for fair wages, safe working conditions, and the right to form trade unions.
Silicon Valley is probably not overwhelmingly Catholic, and in fact, many there seem to worship a different god entirely, i.e., technology. So, it’s not clear how many tech executives will read or heed the Pope’s encyclical. But it is worth noting that some of the world’s most influential figures are warning today against the loss of human dignity and spirituality.
If we were to face anything as serious as a market collapse, the spiritual values that the Pope referred to may become increasingly important to an even greater portion of our population. And that would be a good thing. Wealth inequalities in this country have grown to unprecedented levels. In fact, currently the top 10% are the only ones keeping us from being in an official deep recession. A massive shakeout in the stock market could be the medicine that shifts our moral compass back and that would make forebears from Jefferson to Eisenhower rest more easily in their graves as spirituality could hopefully once again become foundational.
Advice from a legend
Legendary investor Jim Rogers was asked in a recent interview with Wealthion what advice he would give Kevin Warsh, the new Fed chairman.
His answer? “Resign.”
Rogers went on to explain that Warsh is walking into an impossible job. And indeed, he does seem to be in a no-win situation. Inflation is rising while the job market is fragile. The Strait of Hormuz remains closed, with Exxon’s VP warning that oil reserves are nearing critically low levels and that prices will likely rise to $150 or $160 a barrel. The futures market is expecting at least one 25-basis-point rate hike before the end of 2026, according to the CME FedWatch. The guy has a lot on his plate, as do we all right now. While it would benefit all Americans for him to be wildly successful, that boulder that he is pushing uphill is getting bigger by the day.
In the same interview, Rogers also noted that he has three main holdings right now: cash, gold, and silver. He views them as vital protections against soaring global debt and inflation. While inflation devalues fiat currency, gold cannot be printed. There is only what there is.
It is true that gold and silver have experienced sharp losses in the last few months, and they could fall further. It would not be shocking to see gold fall to $3,800— possibly as low as $3,500. People need to liquidate, and gold and silver are usually the first things to go. But prices will rise again. With de-dollarization and ever-increasing debt, gold is the ultimate reserve alternative. A combination of slow economic growth and high inflation, which seems to be on the horizon, has historically been the exact environment in which gold soars. They may not be glamorous like a fresh IPO, or quick like a sudden win on a flashy slot machine, but we agree with Rogers: gold and cash. Those are the safest long-term bets right now.
Why gold and cash? You always have to have cash. It is true that with inflation, the value of the dollar goes down. You can’t protect 100% of your capital and eat. No one has change for a gold bar, so you always need cash. But you also want cash so you can take advantage of a market collapse. The big money in stocks has always been made by buying when everything is way down. And as for silver, we disagree with Rogers here. If the market collapses, silver is likely to go down with it, or even more. But gold will never go down as much as silver.
If markets strain and buckle, gold, because of its liquidity through thick and thin, initially falls, as investors, including countries, sell it to stay afloat. But history suggests that it will always bounce back. Whatever its current price, it protects you in the end. And this time around, while there are never guarantees, gold, beyond its inherent protective qualities—including the fact that, unlike fiat currencies, it can’t be printed—has an elephant in its corner: China.
China has been accelerating its gold buys throughout the Iran war. It is constructing a global network of physical gold vaults in locations like Hong Kong and Saudi Arabia, alongside clearing systems designed to bypass traditional Western financial infrastructure and promote the international use of the Chinese currency, the yuan. The strategy serves as a geopolitical shield, reducing reliance on the U.S. dollar at a time when the dollar looks increasingly vulnerable. China has a vested interest in maintaining stability in gold, even during very rough times, because its citizens own a lot of it, and the government wants to protect that wealth.
If gold falls below $3,500, it will most likely indicate we’ve entered into a depression. If so, we’d expect that gold would still hold its value. Really the only case we have to look at for comparison would be the Great Depression. We didn’t have accurate CPI data then, but we do have data that provides context. Food and shelter, the two most basic essentials, fell by over 50%. In that circumstance, gold at $3,000 would be equivalent to gold at $6,000. The significance is that gold is a hedge in inflationary and deflationary times alike. This is why we continue to stress gold as a critical portion of your portfolio. In a world where tech hype and unprecedented inequalities are testing both our financial structures and our spiritual values, securing your future requires grounding your portfolio in the one asset that has survived every empire, depression, and digital revolution in human history.
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