🍗 All you can invest

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When I was a kid, I begged my parents to go to Golden Corral.

We rarely went out to eat as a family of eight. But when we did, us kids would damn near stage a household mutiny for dinner at this place.

Golden Corral is a Southern staple. Not because it has good food, but because it has all the food. Pizza, steaks, fried shrimp, sesame chicken, Jell-o, soft serve. An all-you-can-eat caricature of the modern American diet.

We loved it until we were five plates in. That was about the point where one of us would either puke, scream or fall asleep in our bowl of melted ice cream (sorry, Mom and Dad).

What can I say? Restraint isn’t your strong suit when you’re 10 years old and staring down a bottomless sundae bar. I wanted it, and the lovely line workers of Golden Corral served it right up.

In a way, that’s how Wall Street operates.

You can get all high and mighty about what’s prudent for a long-term investor, but people want what they want.

And all kinds of firms, brokerages and TikTok influencers from varying shades of legitimacy will give it to you for the right price.

AI pushed this all-you-can-invest dynamic into overdrive. Hyperscalers, venture funds, data center deals – come and get it. Everybody wants your money for their next AI project, to the tune of trillions of dollars.

We’ve been gorging for years now. And after a raucous selloff on Friday – the worst for the Nasdaq 100 in 14 months – I have to wonder: are we getting too full?

Markets are made up of buyers and sellers.

If I want to buy a stock, somebody has to sell shares to me.

That somebody is usually what we call a market maker – a designated holder of many company shares, obligated to sell it to you at a certain price.

But beyond the exchange, the companies and funds are the real sellers. If you own Apple stock, then you actually bought your shares from Apple. Apple gave you the opportunity to buy a slice of their profits (theoretically).

When there are lots of sellers issuing stock into the market, there need to be buyers on the other side. You and me. Wall Street firms. Index funds. Other companies.

Otherwise, prices drop.

This is an important piece of context to understand today as Wall Street tries to shove mega-sized offerings down our gullets.

We all know SpaceX is debuting this Friday with what could be $75 billion in new shares. 

At this size, it’d be the biggest common-stock IPO for a U.S.-based company in history – four times the size of Visa’s $18 billion debut in 2008.

That’s not all. Anthropic and OpenAI, two LLM darlings, are apparently planning to sell shares in their own IPOs soon. 

Investors may have to gobble up over $100 billion in new company equity this summer and fall – a glut so big it’ll exceed the busiest year for IPOs over a handful of months. Google is planning an $85 billion equity raise, with about half of that spilling onto the public stock market. News reports show that Meta may do the same soon, too. 

That’s one hell of a sundae bar, folks. And we’re already pretty full four years into this powerful S&P 500 rally, with AI companies up more than 400% over the same timeframe.

Normal Americans aren’t exactly swimming in cash and brimming with confidence either. Sure, the job market is OK, yet confidence has been slowly eroded by five years of price pressures.

Conference Board data shows that Americans are more pessimistic about their current financial situations than they’ve been in a decade (excluding COVID times, when we were all admittedly down in the dumps).

Interest rates are relatively high, and Wall Street’s stock portfolios are already bursting at the seams, according to the latest Bank of America fund manager survey.

Not only that, but Wall Street has a history of overestimating demand for hot new stocks.

Check out this table of the biggest IPOs in history.

Seven of the 10 largest IPOs slid double digits in their first year of trading, even if a handful of them impressed in their initial debuts.

So…yeah. It’s totally fair to wonder who will actually be hungry for these new issues, even though your mom, brother and uncle are all asking about SpaceX stock. Or at the very least, we may have to think about what other parts of the market these IPOs will steal attention from. What will everybody sell in order to buy in?

This all-you-can-invest story stretches far beyond SpaceX, Anthropic and OpenAI. Wall Street has been conservative on IPOs for a few years after the high-flying days of 2021. Now, AI spending is huge, and businesses of all sizes will need to fund their ambitious plans for the future.

The tide seems to be turning at a questionable moment.

We’re fat and happy off the buffet, yet AI companies think we’re hungry for more.

Some market experts have evoked the memory of the 2000s tech go-go years, implying that the SpaceX IPO is a sign of market-topping excess.

I’m not here to call a bubble. Nobody can do that, so why even play the game?

Instead, I think it’s important to remember that you can have too much of a good thing. And it’s hard to say where the line is until you hurl.

Big, shiny IPOs could tell us more about a lopsided balance between what we want and what corporate America thinks we want.

And in that way, it could be a sneaky obstacle for your stock portfolio, even if you’re actively trying to stay away from the AI-frenetic names.

Thanks for reading!

Callie