Virgin Galactic is the Netscape of the Space stock market boom.
Space is the next big thing. It has been inevitable for many years but like most desirable predicted things, it has taken a lot longer to materialize than hoped. Even now this ‘next big thing’ is a way away and it is only the premature arrival of Virgin Galactic that has sign-posted that the destination of Space as the next stock market boom and bubble is on the launch.
Virgin Galactic is the Netscape of space stocks and while we marvel at its tremendous stock market performance to date, you have seen nothing yet for the company or what is about to emerge as others come to market.
Virgin Galactic: We have lift off.
As anyone who has seen SpaceX’s self-deprecating videos of crash landings will note, it is extremely early days for this giant leap for humanity and its equity markets. Tech stocks since the 18th century have always gone up like rockets and come down like rocks. Even ultimately successful ones, which are normally in the minority have rough rides. The space stock boom will be no different.
The stock market cycle of boom, bubble and bust starts now for Space.
Investors should never be deceived. Tomorrow’s ‘next big thing’ will likely be the day after’s market outrage. A myriad of companies will appear and will levitate on a cloud of lies, exaggeration and fraud. The few ‘real deals’ will plummet in the post market bubble and crash alongside all the stock promotions that the stock market always stuffs into the portfolios of eager ‘investors.’ A subset of the real deals will survive and emerge and be absorbed into the core of the market and will likely become the giants of a future period of the stock market, just as Apple, Amazon have.
What should an investor do?
This ‘next big thing’ has to be traded or ignored completely.
If you aren’t going to ignore it like Buffett ignored the Dotcom, how can this wild emerging cycle be played?
The best way is ignore ‘Space’ as an idea beyond it being ‘hot’ and beyond ‘Space’ being a handle for a new sector. Pay no attention to the verbiage or the infinite possibilities of exploiting the universe. Take the hint from the hyperbole of Virgin Galactic. What part of the Galaxy are ‘Virgin Galactic’ planning to visit? How would they be doing if they were called ‘Virgin Upper Atmosphere?’ The substance of this boom, bubble and bust will be barely tangible. The alpha and the beta will come from the inherent fragility and super high risk of these opportunities.
The way to win is to buy everything and treat them all as you might have treated dot.com darlings. You buy them and you sell them as soon as to bag a nice profit. It’s one huge game of bluff and to win it you have to bet small and wide and be emotionally detached. This will be the same old story of riding the hype and making sure you are not the one left holding the bag.
There will be a huge bag that many will be left holding and they will weep as they always do and they will adamantly claim they were defrauded in the same demonstrative way they claimed they were smart when the market bubbled in their favour.
This is the only trap you need to avoid.
We don’t care though, because we know the crash will come and we know whatever the apex of our profits we won’t get to keep it all. When the market begins to crash we will either have been out of the market way too early or if we have strong enough nerves to see over the top of the bubble to bail as the market tanks.
Space will boom, bubble and bust, it’s just a matter of when, not if and if this historic equity long boom keeps going, as it can, then that cycle starts now. If the long boom ends in 2020, which it may, then Space will be on the flipside of that crash.
I think the US market has a bubble phase ahead of it and if it does then Space will be the bubble of the bubble. As such I will buy a little of everything and not confuse my brains with a bubble market.
It’s coming, so have a plan and mainly have a plan to leave the table with a fat profit not a thumping loss.