The recent SpaceX IPO has captured significant investor attention. As one of the most anticipated public offerings in recent years, it has sparked conversations about innovation, growth, and whether investors should rush to gain exposure to the next big opportunity.
At the same time, reports suggest that OpenAI and Anthropic may be moving closer to public offerings of their own, creating even more excitement around artificial intelligence and the future of technology.
With these developments making headlines, a common question has emerged: Do investors need to participate in every high-profile IPO to benefit from long-term innovation?
While every investor’s circumstances are different, the answer may not be as straightforward as headlines may suggest.
Great Companies and Great Investments Are Not Always the Same Thing
There is little debate that SpaceX, OpenAI, and Anthropic have helped shape their respective industries. Their innovations have attracted attention from investors, businesses, and consumers alike.
However, a great company does not automatically become a great investment at every price.
When evaluating an investment opportunity, investors are not only assessing the quality of a business. They are also assessing the valuation being placed on that business and the expectations built into its future growth.
In highly anticipated IPOs, those expectations can become elevated before public investors have an opportunity to participate. Even successful companies can experience periods of volatility if future results fail to meet market expectations.
The Challenge of Investing in Popular IPOs
IPO excitement can create a sense of urgency.
Financial headlines, social media discussions, and conversations among friends, family members, or colleagues can make it feel as though immediate action is necessary to avoid missing a significant opportunity.
For investors considering a newly public company, it may be helpful to ask several important questions before making an investment decision:
- How does this investment fit within my overall financial plan?
- What percentage of my portfolio am I willing to allocate to a single company?
- Am I investing based on a long-term strategy or reacting to recent headlines?
- How would this investment affect my overall risk profile?
- What assumptions are already reflected in the company’s valuation?
- Are there tax implications or tradeoffs I should consider before investing?
These questions may not generate the same excitement, but they can help investors evaluate opportunities through the lens of a disciplined investment process.
Missing the IPO Doesn’t Mean Missing the Opportunity
A common perception is that investors must act quickly when a company first becomes publicly traded or risk missing out altogether.
However, public companies remain available to investors long after their market debut.
Some investors choose to wait until a company has established a longer public track record, released additional financial information, or traded long enough for market expectations to become clearer. Others may determine that exposure through a diversified portfolio better aligns with their goals.
Investing is not a race to be first. It is a process of making informed decisions that support long-term objectives.
Innovation Is Not the Same as Diversification
The excitement surrounding artificial intelligence has led some investors to ask how they can gain exposure to the potential growth of the industry.
However, investing in a single company is not the only way to participate in technological innovation.
As our Director of Investments, Charles “Chad” NeSmith, CFA, CFP®, has noted, a useful historical example is the smartphone market in the early 2000s. An investor may have correctly believed that smartphones would become a transformative technology, and that view would have ultimately proven correct. However, being right about the technology did not necessarily mean being right about the company that would ultimately capture the most value.
At the time, several companies appeared well-positioned to benefit from the growth of smartphones, including Palm, BlackBerry, and Apple. An investor who selected Palm or BlackBerry, but did not own Apple, may have correctly identified the broader opportunity while still missing the company that ultimately became the dominant player.
This illustrates an important investing principle: identifying a promising innovation is only one part of the equation. Determining which company will ultimately benefit the most can be considerably more difficult.
For that reason, we generally believe in maintaining diversified portfolios that provide exposure across a broader group of companies rather than concentrating heavily in a single name. Many diversified portfolios already include companies that are developing, implementing, or benefiting from advances in artificial intelligence, however, the appropriate approach will depend on an investor’s goals, time horizon, risk tolerance, and overall financial circumstances.
Focus on the Plan, Not the Headlines
Whether the conversation centers on SpaceX, OpenAI, Anthropic, or another emerging trend, the same principle applies: investment decisions should be guided by a thoughtful financial plan rather than the latest market headline.
The goal of a financial plan is not to own every popular investment. It is to build a portfolio that aligns with your objectives, cash flow needs, time horizon, and tolerance for risk.
Market enthusiasm can be powerful but maintaining discipline during periods of excitement can be equally important. In many cases, the more important question is not whether a company is innovative, but whether an investment supports the long-term strategy designed to help achieve your goals.
If you’d like to discuss how emerging investment opportunities fit within your broader financial plan, our team is here to help. Contact us and we can work with you to evaluate potential risks, portfolio implications, and whether an investment aligns with your long-term goals and objectives.
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