The stock market doesn’t always make sense.
You must understand this to become a successful investor.
You may have all kinds of personal or political or economic reasons why you don’t think the stock market will go up, and stocks are quite happy to prove you dead wrong and soar to new heights anyway.
The same thing works in reverse too. You might have all kinds of valid reasons and data for why it will go up, and stocks punch your portfolio in the face.
I wrote about this several years ago about Elon Musk’s company Tesla.
And this is apropos to write about again with Elon Musk’s newly publicly traded company SpaceX.
SpaceX made Elon a trillion-dollar man, and for a while it was in the top five companies in the world by market cap. Only Apple, Alphabet (Google), and Nvidia were larger.1
In its first few days of trading, SpaceX has had swings of as much as half a trillion dollars in a single day—roughly the entire market cap of Mastercard.
There was a moment last week when it was bigger than Amazon and Microsoft even though its sales revenue was smaller.
Like WAY smaller.
Charlie Bilello, of Creative Planning, has the numbers:
Over the last 12 months:
-Amazon generated $91 billion in net income on $743 billion in sales.
-Microsoft generated $125 billion in net income on $318 billion in sales.
-SpaceX generated a $9 billion net loss on $19 billion in sales.2
This means you can have a net loss, and your stock price can still go up.
Future expectations and market sentiment are a big deal.
Aswath Damodaran helps make sense of this by showing how stories and numbers are connected to stock prices:
In 2020, what happened was because of COVID the numbers didn't make much sense for companies. You look at revenues for Marriott, you're really learning nothing about the company. So what it makes people do then is that numbers don't make sense, let me just tell a story. And what you have then is the other extreme, which is rather than relying on numbers, you're relying entirely on the story. So when you look at the Teslas, the Bitcoins, the Airbnbs the story is pushing the price up, but there seems to be no thought about how these stories play out in numbers. So this kind of illustrates the fact that you need both to be an investor. You need both stories and numbers.3
SpaceX is an example where the story is more powerful than the current numbers.
At least right now.
Remember that when wondering why certain stocks do what they do. You can have a stock with killer numbers and not much of a story and the price might be flat or down. You can have a stock without significant numbers and a story that captures the imagination of people and it shoots to the moon.
Pun intended.
Who knows what SpaceX will do? I don’t make recommendations over the internet.
Just remember: stories—not just fundamental numbers—matter massively in the stock market.
Memorize that.
If you don’t, you can miss out on significant returns.
Stories can trump spreadsheets.
People are wired to believe in visionaries, not accountants.
Know this too: stocks that prove year after year to only have a story and no numbers become myths. And myths, like monsters within them, can devour investors.
--
Sources:
1. “The Week in Charts (6/16/26)”. Accessed online.
2. “The Week in Charts (6/16/26)”. Accessed online.
3. Interview with Michael Hanson (February 2, 2021). Accessed online.