82% of the greatest 100x stocks in history lost more than 50% of their value along the way — and the average drawdown was 65%.
Excess Returns
82% of the greatest 100x stocks in history lost more than 50% of their value along the way — and the average drawdown was 65%.
TL;DR
Chris Mayer, co-founder of Woodlock House Family Capital and author of the forthcoming "The Investor's Odyssey," joins Matt Ziegler to interrogate SpaceX's $2.6 trillion IPO valuation (145x revenue) through the lens of long-term investing [1] — Chris Mayer "When SpaceX hit $2.6 trillion, it was trading at 145 times revenue. Google at IPO was under 10 times revenue — and people thought that was …" 07:53 . They warn that AI labels are doing too much analytical work, draw parallels to the dot-com era shakeout [2] — Chris Mayer "SpaceX is three very different businesses under one ticker. 'AI' means something different at Google, IBM, and a golf app. When a label doe…" 09:15 , and argue that patient investors who wait for financial proof — not anecdotes — sidestep most risk. The single most useful takeaway: you never need to be early if the business is truly exceptional [3] — Chris Mayer "No need to be early in great businesses: If a business is truly exceptional, investors have many 'bites at the apple' and do not need to ru…" 18:31 .
Chris Mayer and Matt Ziegler discuss long-term investing, 100-baggers, AI stocks, SpaceX valuation, founder-led companies, and why the best investments often come with brutal drawdowns. They cover Mayer's new book The Investor's Odyssey, the danger of letting labels like AI do too much work, how to think about TAM and capital allocation, and why patience may be the biggest edge for investors trying to own great businesses for decades.
The narrator introduces the episode framing: Chris Mayer and Matt Ziegler examine SpaceX's IPO from a long-term investing angle rather than a short-term news lens.
Chris Mayer introduces 'The Investor's Odyssey,' explaining why a book about resisting sirens and playing the long game is especially relevant in today's AI-fueled market.
Using general semantics, Mayer warns that terms like 'AI' and 'TAM' can substitute for real analysis, encouraging investors to decompose businesses segment by segment. [1] — Chris Mayer "SpaceX is three very different businesses under one ticker. 'AI' means something different at Google, IBM, and a golf app. When a label doe…" 09:15
Mayer predicts an AI rationalization akin to the dot-com bust, noting that companies adding AI features without solving real problems will face a reckoning — and the winners may be ordinary businesses. [1] — Chris Mayer "Every company is adding AI features because it's the thing to do — not because it solves a problem. The returns won't materialize, a pause …" 12:00
Mayer's 100-bagger research shows that exceptional businesses offer many entry points; waiting for financial proof of traction eliminates most risk without sacrificing most upside. [1] — Chris Mayer "The 100-bagger research is clear: if a business is genuinely exceptional, you'll have many entry points. Waiting a few quarters to see real…" 18:00
Mayer prefers businesses still 'becoming' great over mature blue chips, emphasizing market cap relative to TAM and the compounding power of capital reinvested at high returns.
The conversation critiques SpaceX's 'we own the TAM' S-1 framing, arguing that great returns can come from capturing a modest slice of a large market with disciplined capital allocation. [1] — Chris Mayer "Defining your company's value as 'we'll own the TAM' is circular logic. You can build a wonderful, highly profitable business capturing a s…" 27:15
Mayer dissects SpaceX's governance: Musk controls the board, shareholders can't sue him, and S&P inclusion rules around profitability and free float reflect broader governance principles. [1] — Chris Mayer "SpaceX's IPO structure gives Musk full board control and prohibits shareholder lawsuits. For a long-term investor, that's a governance nigh…" 32:20
Mayer explains his framework for evaluating founder-led companies: modest compensation, accumulated behavioral anecdotes, and the 'Hemingway bullshit detector' as key tools. [1] — Chris Mayer "Look at compensation first. If the founder isn't extracting wealth through salary and options, that's signal. Then collect the small anecdo…" 38:10
Mayer explains his framework for evaluating founder-led companies: modest compensation, accumulated behavioral anecdotes, and the 'Hemingway bullshit detector' as key tools. [1] — Chris Mayer "Look at compensation first. If the founder isn't extracting wealth through salary and options, that's signal. Then collect the small anecdo…" 38:10
SpaceX's broad employee stock grants — including a Mexican immigrant welder who became a millionaire — exemplify how shared ownership preserves culture and creates long-lasting enterprises. [1] — Chris Mayer "Musk gave stock to everyone at SpaceX, including a Mexican immigrant welder who became a millionaire. When employees are owners, the cultur…" 41:20
The Worldly Partners study: 82% of 100-baggers fell 50%+, with a 65% average drawdown and 8-year waits between highs. Wes Gray's 'God portfolio' proves even perfect picks get punished. [1] — Chris Mayer "82% of the greatest compounders in history — stocks that returned 100x or more since 1972 — lost more than half their value at some point. …" 47:40 [2] — Chris Mayer "Wes Gray built the hypothetical 'God portfolio' — the perfect stocks over any 5-year period from 1927 to 2016. It still got hit with 35%+ d…" 50:40
Mayer traces market strangeness to GFC scarring, COVID distortions, and CIBC data showing human discretionary trading has fallen from 80% to 7% of volume.
Three $1 trillion+ IPOs in 12 months prompts reflection on Greenspan's 'irrational exuberance' and what 'rational exuberance' — optimism grounded in logical assumptions — might look like. [1] — Chris Mayer "Within 12 months, SpaceX, OpenAI, and Anthropic could all debut at over $1 trillion valuations. Ten years ago, the idea of Apple hitting $1…" 56:35
Chapter 2 · 04:00
Chris Mayer introduces 'The Investor's Odyssey,' explaining why a book about resisting sirens and playing the long game is especially relevant in today's AI-fueled market.
When SpaceX hit $2.6 trillion, it was trading at 145 times revenue. Google at IPO was under 10 times revenue — and people thought that was expensive. In finance, the bubbles get bigger every generation.
Google went public in 2004 at a market cap of roughly $20 billion and less than 10 times revenue, yet delivered fabulous long-term returns despite seeming overvalued at the time.
Chapter 3 · 08:01
Using general semantics, Mayer warns that terms like 'AI' and 'TAM' can substitute for real analysis, encouraging investors to decompose businesses segment by segment. [1] — Chris Mayer "SpaceX is three very different businesses under one ticker. 'AI' means something different at Google, IBM, and a golf app. When a label doe…" 09:15
SpaceX is three very different businesses under one ticker. 'AI' means something different at Google, IBM, and a golf app. When a label does your thinking, you skip the analysis — and that's where you get hurt.
When SpaceX hit a $2.6 trillion market cap, it was trading at approximately 145 times revenue, far exceeding Google's IPO multiple of under 10 times revenue.
Amazon, one of the greatest long-term compounders in history, suffered a 90% drawdown from peak to trough at some point in its journey.
Every company is adding AI features because it's the thing to do — not because it solves a problem. The returns won't materialize, a pause will come, valuations will get crushed, and value-minded investors will pick up the real long-term winners at a discount.
Chapter 4 · 12:05
Mayer predicts an AI rationalization akin to the dot-com bust, noting that companies adding AI features without solving real problems will face a reckoning — and the winners may be ordinary businesses. [1] — Chris Mayer "Every company is adding AI features because it's the thing to do — not because it solves a problem. The returns won't materialize, a pause …" 12:00
Chris Mayer shared anecdotal evidence from expert networks showing that some large enterprise customers consider their software vendor's AI product a complete waste of time that adds no value.
Pets.com died. Chewy lived. Lots of dot-com ideas didn't work until someone figured out the real problem. The same dynamic is playing out with AI — and the eventual winners may not look like tech companies at all.
Chapter 5 · 16:00
Mayer's 100-bagger research shows that exceptional businesses offer many entry points; waiting for financial proof of traction eliminates most risk without sacrificing most upside. [1] — Chris Mayer "The 100-bagger research is clear: if a business is genuinely exceptional, you'll have many entry points. Waiting a few quarters to see real…" 18:00
The 100-bagger research is clear: if a business is genuinely exceptional, you'll have many entry points. Waiting a few quarters to see real traction show up in the financials is not going to cost you a 100-bagger.
If a business is truly exceptional, investors have many 'bites at the apple' and do not need to rush in at the earliest opportunity — waiting for confirmation rarely costs a fatal amount of upside.
Chapter 6 · 21:00
Mayer prefers businesses still 'becoming' great over mature blue chips, emphasizing market cap relative to TAM and the compounding power of capital reinvested at high returns.
Chapter 7 · 25:10
The conversation critiques SpaceX's 'we own the TAM' S-1 framing, arguing that great returns can come from capturing a modest slice of a large market with disciplined capital allocation. [1] — Chris Mayer "Defining your company's value as 'we'll own the TAM' is circular logic. You can build a wonderful, highly profitable business capturing a s…" 27:15
SpaceX's S-1 includes an incentive compensation clause that grants Elon Musk a bonus — reportedly around a trillion dollars — if he establishes a colony of 1 million people on Mars.
Defining your company's value as 'we'll own the TAM' is circular logic. You can build a wonderful, highly profitable business capturing a small corner of a large market — and that business might be worth far more than the TAM-based math suggests.
Chapter 8 · 29:43
Mayer dissects SpaceX's governance: Musk controls the board, shareholders can't sue him, and S&P inclusion rules around profitability and free float reflect broader governance principles. [1] — Chris Mayer "SpaceX's IPO structure gives Musk full board control and prohibits shareholder lawsuits. For a long-term investor, that's a governance nigh…" 32:20
SpaceX's IPO structure gives Musk full board control and prohibits shareholder lawsuits. For a long-term investor, that's a governance nightmare — unless you trust the person completely. Most people obviously decided they did.
Apollo's Torsten Slok found that if you remove the roughly 84 AI-related and energy companies from the S&P 500, the rest of the index is down year-to-date. The headline number is hiding a deeply lopsided market.
Apollo's chief economist Torsten Slok found that if you back out AI-related and energy companies from the S&P 500, the rest of the index is down for the year.
Apollo's Torsten Slok identified approximately 84 AI-related companies in the S&P 500, including semiconductor companies, that have driven much of the index's gains.
Chapter 9 · 34:27
Mayer explains his framework for evaluating founder-led companies: modest compensation, accumulated behavioral anecdotes, and the 'Hemingway bullshit detector' as key tools. [1] — Chris Mayer "Look at compensation first. If the founder isn't extracting wealth through salary and options, that's signal. Then collect the small anecdo…" 38:10
Look at compensation first. If the founder isn't extracting wealth through salary and options, that's signal. Then collect the small anecdotes — the office, the car, how others describe them. Your internal bullshit detector, as Hemingway called it, is a real investment tool.
Chapter 10 · 38:57
Mayer explains his framework for evaluating founder-led companies: modest compensation, accumulated behavioral anecdotes, and the 'Hemingway bullshit detector' as key tools. [1] — Chris Mayer "Look at compensation first. If the founder isn't extracting wealth through salary and options, that's signal. Then collect the small anecdo…" 38:10
Musk gave stock to everyone at SpaceX, including a Mexican immigrant welder who became a millionaire. When employees are owners, the culture that made the company great gets preserved and carried forward by the people most invested in it.
Chapter 11 · 43:02
SpaceX's broad employee stock grants — including a Mexican immigrant welder who became a millionaire — exemplify how shared ownership preserves culture and creates long-lasting enterprises. [1] — Chris Mayer "Musk gave stock to everyone at SpaceX, including a Mexican immigrant welder who became a millionaire. When employees are owners, the cultur…" 41:20
Investors idealize a stock, expect steady gains, then face devastating drawdowns and years-long waits for new highs. The frustration and demoralization come from a mismatch between expectation and reality — not from the stocks themselves.
Chapter 12 · 47:02
The Worldly Partners study: 82% of 100-baggers fell 50%+, with a 65% average drawdown and 8-year waits between highs. Wes Gray's 'God portfolio' proves even perfect picks get punished. [1] — Chris Mayer "82% of the greatest compounders in history — stocks that returned 100x or more since 1972 — lost more than half their value at some point. …" 47:40 [2] — Chris Mayer "Wes Gray built the hypothetical 'God portfolio' — the perfect stocks over any 5-year period from 1927 to 2016. It still got hit with 35%+ d…" 50:40
82% of the greatest compounders in history — stocks that returned 100x or more since 1972 — lost more than half their value at some point. Average drawdown: 65%. Average return from starting point: 533x. The price of greatness is volatility.
A Worldly Partners study found that 82% of stocks that returned 100x or more since 1972 lost more than 50% of their market value at some point along the way.
The same Worldly Partners study found the average maximum drawdown for 100-bagger stocks was 65%, illustrating the brutal volatility required to capture exceptional long-term returns.
Despite brutal drawdowns, the stocks in the Worldly Partners study that became 100-baggers returned 533 times from their starting point on average.
The Worldly Partners study found that 100-bagger stocks went an average of 8 years between setting new all-time highs, requiring extraordinary patience from investors.
Wes Gray built the hypothetical 'God portfolio' — the perfect stocks over any 5-year period from 1927 to 2016. It still got hit with 35%+ drawdowns repeatedly. Any client would have fired God. The problem is never the stocks; it's the investor.
A study by Wes Gray (also associated with Michael Mauboussin) showed that a hypothetical 'God portfolio' — the objectively best stocks over any 5-year period — still suffered drawdowns of 35% or more, enough to get any manager fired.
Chapter 13 · 52:17
Mayer traces market strangeness to GFC scarring, COVID distortions, and CIBC data showing human discretionary trading has fallen from 80% to 7% of volume.
A CIBC note cited by Chris Mayer suggested that in 2003, 80% of market trading volume was driven by human decision-makers not following algorithms, versus just 7% today.
Chapter 14 · 56:29
Three $1 trillion+ IPOs in 12 months prompts reflection on Greenspan's 'irrational exuberance' and what 'rational exuberance' — optimism grounded in logical assumptions — might look like. [1] — Chris Mayer "Within 12 months, SpaceX, OpenAI, and Anthropic could all debut at over $1 trillion valuations. Ten years ago, the idea of Apple hitting $1…" 56:35
Within 12 months, SpaceX, OpenAI, and Anthropic could all debut at over $1 trillion valuations. Ten years ago, the idea of Apple hitting $1 trillion seemed absurd. The question isn't whether it's possible — it's whether it's rational.
Within a 12-month span, SpaceX, OpenAI, and Anthropic are expected to go public all with valuations of at least $1 trillion — an unprecedented concentration of mega-IPOs.
Every investor who buys a stock believes management will figure it out and reward them over time. That optimism is rational exuberance. The question Alan Greenspan couldn't answer — and neither can we — is exactly when it becomes irrational.
No indexed bits in this chapter.
82% of the greatest compounders in history — stocks that returned 100x or more since 1972 — lost more than half their value at some point. Average drawdown: 65%. Average return from starting point: 533x. The price of greatness is volatility.
Every company is adding AI features because it's the thing to do — not because it solves a problem. The returns won't materialize, a pause will come, valuations will get crushed, and value-minded investors will pick up the real long-term winners at a discount.
This episode
Factual claims made this episode, and whether a source was named.
SpaceX traded at approximately 145 times revenue when it hit a $2.6 trillion market capitalization.
Google went public in 2004 at a market cap of roughly $20 billion and at less than 10 times revenue.
Amazon suffered a 90% peak-to-trough drawdown at some point during its history.
A Worldly Partners study found that 82% of stocks returning 100x or more since 1972 lost more than 50% of their market value at some point.
The average maximum drawdown for 100-bagger stocks was 65%, yet those companies returned 533 times from their starting point on average.
The Worldly Partners study found that 100-bagger stocks went an average of 8 years between setting new all-time price highs.
Apollo's chief economist Torsten Slok found that if you remove AI-related and energy companies from the S&P 500, the rest of the index is down year-to-date.
Torsten Slok identified approximately 84 AI-related companies in the S&P 500, including semiconductor companies, that have driven much of the index's returns.
A CIBC note reported that in 2003, approximately 80% of stock market trading volume was driven by human decision-makers not following rules or algorithms, versus only about 7% today.
Wes Gray's 'Even God Would Be Fired' study showed that a perfect hindsight portfolio of the best stocks from 1927 to 2016 still suffered drawdowns of 35% or more on multiple occasions.
SpaceX's IPO documents include a governance clause preventing shareholders from suing Elon Musk.
SpaceX's S-1 includes an incentive compensation clause granting Elon Musk a major bonus if he establishes a colony of 1 million people on Mars.
Within a 12-month span, SpaceX, OpenAI, and Anthropic are all expected to go public at valuations of at least $1 trillion each.
Warren Buffett observed that if a company earns a 15% return on equity with no payout ratio, the CEO will invest more capital over the next 5 years than the entire historical capital base of the business.
This episode
Discussed as SpaceX's founder-CEO whose governance structure gives him unchecked control, and whose tolerance for failure is cited as essential to SpaceX's success.
Former Federal Reserve Chair who coined 'irrational exuberance' in a 1996 speech; his phrase and question are used to frame the current AI-driven market.
Apollo's chief economist, whose note identified 84 AI-related companies driving S&P 500 returns and showed the rest of the index is down year-to-date.
Quantitative researcher behind the 'Even God Would Be Fired' study showing that a perfect hindsight stock portfolio still suffered severe drawdowns.
Central case study for the episode; its $2.6 trillion IPO at 145x revenue is used to explore valuation discipline, governance, and long-term investing principles.
Used as the benchmark IPO comparison: Google went public in 2004 at under 10x revenue and still delivered exceptional long-term returns despite seeming overvalued.
Referenced as the canonical example of a 90% peak-to-trough drawdown in a company that ultimately became one of history's greatest compounders.
Expected to IPO within 12 months at a valuation of at least $1 trillion alongside OpenAI and SpaceX.
Cited as a dot-com-era business model that survived and thrived after the initial Pets.com failure, used as evidence that the eventual winners of a technology cycle often emerge from initial failures.
Cited by Chris Mayer as an example of a company with an ingrained culture of return on invested capital that makes it well-positioned to avoid wasteful AI spending.
Expected to IPO within 12 months at a valuation of at least $1 trillion, cited alongside Anthropic and SpaceX as part of an unprecedented wave of mega-IPOs.
Used as an example of a company that went public at a big premium; while the business performed well, the stock price went nowhere as the valuation became cheaper through earnings growth.
Investment firm whose chief economist Torsten Slok published the note identifying 84 AI companies driving S&P 500 outperformance.
Referenced in the context of Ron Baron's successful Tesla investment as context for his bullish $10–30 trillion SpaceX price targets.
Chris Mayer's investment firm, co-founded by him; he speaks from the perspective of a long-term, fundamental investor.
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