Quote · Excess Returns
We Asked GMO’s Head of Asset Allocation Why This Bubble is Easy — But Investors Will Get it Wrong
Where this was said
Why massive stock issuance could challenge the market
At 36:07 · chapter starts 34:32
Ben Inker warns that SpaceX, OpenAI, Anthropic and others could add 5-6% of US market cap as supply — historically the largest surge ever — with research suggesting 1% supply increases reduce returns by 7.5% [1] — Ben Inker "A 1% increase in stock market supply historically associates with a 7.5% worse return over the following year. SpaceX, OpenAI, and Anthropi…" 37:35 .
Major cloud and AI hyperscalers have roughly doubled their debt ratios in the past nine months as they finance massive data center buildouts.
A 1% increase in stock market supply historically associates with a 7.5% worse return over the following year. SpaceX, OpenAI, and Anthropic alone could add 5-6% of US market cap as supply. The real impact hits not at IPO but 12 months later as lockups expire.
If SpaceX, OpenAI, Anthropic and other large private companies go public, they could add 5-6% of US market cap as supply over the next 12 months — more than in living memory.
Historical data suggests a 1% increase in US stock market supply is associated with a 7.5% worse return over the subsequent year.
