Dear Financial Samurai,
Congratulations to the 4,000+ millionaires created by the SpaceX IPO. One longtime reader who worked there for over 10 years cashed out $3 million before the IPO and still has another $8 million or so left. It was a successful debut, closing up $25.95 to $160.95 from its $135 offering price. That said, anything can happen between now and the staggered lockup periods that employees and investors are subject to.
Personally, I did not indicate interest for SpaceX shares through my brokerages. In my new post on not wanting to be exit liquidity, I share my reasons why.
One I didn't mention there: my money is finite, and I'd rather be on the hunt for the next SpaceX instead. For example, I've set aside capital for the Y Combinator companies pitching at next Tuesday's demo day, and I'll write a post about the experience. If you are a YC company looking to raise and feel I could help, please let me know.
FIRE Investors Are More Conservative Overall
Since I write about investing all the time, I thought it was worth sharing a FIRE investor's perspective versus what you typically read on social media and in the news. This way, you have a better idea where I'm coming from when I talk about skipping the SpaceX IPO, paying off your mortgage before retirement, and building a bond position as yields rise.
All of these actions lower your risk of losing money, but also lower your chances of making more money. So they may be frustrating to those of you still early on your financial independence journey. But I'm at a stage where I simply can't be too cavalier with my money, since we are dual-unemployed parents of two children living in an expensive city.
Over the past 30 years of investing, I've found time and again that valuations tend to revert to the mean. So I can't help but reduce risk when valuations are expensive and add risk when they're not. This is why I trimmed down to 80% equities from 100% in my public equities allocation after the S&P 500 hit 7,500.
Check out: A FIRE Investor With No Steady Paycheck Can't Afford To Be Too Wrong. The post should give you a sense of how your investment philosophy might change once your safety net is gone.
Investment FOMO Friday
I wasn't on social media or following the news much on Friday, because school is out and I took the family to Six Flags in Vallejo. It was an easy day trip, and it made me realize that flying down to San Diego for Legoland and SeaWorld isn't really necessary anymore.
When I finally checked Twitter and the news, there sure seemed to be an endless stream of articles about how everybody got rich off the SpaceX IPO. One of the early backers was Steve Jurvetson, who I once sat next to at the second-to-final table of a charity poker tournament at the Menlo Circus Club in Atherton. He's up multiple billions since our match.
I feel some FOMO all the time living in San Francisco, especially with one of my tenants joining Anthropic last year and then asking if he could upgrade to bigger trash and recycling bins. But the more I've invested in venture capital over the years, the less FOMO I feel. And maybe, that benefit is more valuable than you think.
Funny enough, I usually don't read every quarterly statement from the traditional VC firms I invest in. But I started to last year, and pleasantly discovered that one 2022 fund has a 10% weighting in SpaceX. It's nowhere near life-changing money, since 10% of $500,000 is only $50,000. Still, it sure takes the edge off the FOMO of sitting out a hot IPO.
For those of you thinking about investing in traditional venture funds, you sadly have to start thinking about your mortality. These funds have 8 to 11-year life cycles, which means you might not be around to get your money back and then some. This is why public venture capital like VCX are valuable, given their liquidity. The tricky part is investing in them at the right time.
See: The Problem With Investing In Venture Capital When Older
Let The FIRE Summer Begin!
Finally, I might be entering a midlife crisis, given I'll have only one year left in my 40s after I turn 49 this coming week. So I feel like I've got to change things up over the next 12 months and go on at least one real adventure. Maybe even buy a new car after 10 years of ownership. Although I just spent $3,300 replacing my coolant system, clearing a check engine light, and fixing a door and window, so maybe I'll hold off another six months.
But to start, I'm going to do my best to enjoy this summer. Last summer was busy with a five-week remodel of my aunt's in-law unit and a string of consulting sessions. This summer is all about rest and relaxation. So I apologize in advance if I'm slow to get back to your emails.
Until next week!
To your financial freedom,
Sam
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