Why Your Financial Advisor Doesn't Want to Talk About SpaceX

On June 12, after more than two decades as a private company, SpaceX finally went public in one of the most anticipated IPOs in a generation. And somewhere right now, a financial advisor is quietly hoping no client asks the obvious question: why did you never get me into that? 

The honest answer is uncomfortable, and it is still playing out today. Most advisors do not talk about SpaceX, or any company like it, because the conversation is hard, the outcome is uncertain, and if it goes sideways they are the ones who take the angry phone call. So they say nothing. They keep you in a tidy 60/40 portfolio, charge a full advisory fee, and call it prudence. 

I want to make the opposite case. A thoughtfully sized position in a company like SpaceX is not a reckless flyer at the edge of a sound financial plan. Done correctly, it is one of the most important parts of building real wealth. 

First, a quick refresher on Gatewood’s Three Buckets Framework 

Regular readers will recognize our three buckets framework, the goals-based approach we use to build a financial life. It is a strategy pioneered by the CFA Institute: you sort your assets into risk buckets and allocate to each one on purpose. If you have not read our Three Buckets, One Purpose eBook, start there. The short version is this: 

1. Bucket 1, Personal Risk, the cash bucket. Liquidity, usually three to thirty months of expenses depending on your stage of life, so you can weather any economic storm without selling at the wrong time. We help clients set this up in the good times to prepare for the inevitable bad. 
2. Bucket 2, Market Risk, the retirement bucket. The diversified portfolio that funds the full cost of your future. Its job is to keep pace with your goals and outrun inflation, not to shoot the lights out. Stay diversified and ultimately fund the present value of all your spending needs during retirement. 
3. Bucket 3, Aspirational Risk, the future bucket. Everything in excess of what the first two buckets require. This is where concentrated risk belongs, and where we expect assets to significantly outperform the market. Embrace higher volatility and longer time horizons in pursuit of outsized returns. 

The whole point of the framework is that the buckets work together. Buckets 1 and 2 are what secure your foundation, and precisely because they remove the risk of ruin, they are what make Bucket 3 possible. You cannot reach for the home run if a single strikeout wipes you out. But once the foundation is solid, refusing to swing at all becomes its own kind of risk. 

Our founder, John Gatewood, puts it in a single line: wealth is made through concentration, but preserved through diversification. Buckets 1 and 2 are the diversification that preserves. Bucket 3 is the concentration that builds. Most people get the danger of that third bucket exactly backwards. They think the risk is the volatility, when the real risk is owning nothing that can ever change your life or your financial legacy. Its two rules are simple: take concentrated risk, and give it a time horizon longer than ten years. 

SpaceX is the textbook third bucket 

SpaceX checks every box. Concentrated? Yes. Long time horizon? It spent more than two decades as a private company, and the case for it has always been measured in decades, not months. Potentially transformational? That is the entire thesis. 

There is a name for what makes a company like SpaceX so difficult to compete with. Investors call it an economic moat, a profound, sustainable competitive advantage that protects a company from its rivals. Think of it like a medieval castle: the wider and deeper the moat, the harder it is for invaders to breach the walls. 

For investors, finding a company with a wide moat is the holy grail. It means the business has not just stumbled onto a profitable idea. It has built structural barriers, like SpaceX’s impossibly complex engineering and massive capital requirements, that prevent competitors from simply copying it and driving down its margins. When you take concentrated risk in Bucket 3, you are not just buying a good product. You are looking for a moat deep enough to preserve a company’s pricing power and market share, and to give it the long, uninterrupted runway that great compounders need. 

My own father, Bob, who taught me to measure investments in decades rather than days, likes to say that the only businesses worth concentrating in are the ones nobody else can copy. That is a moat, and it is the lens I have used ever since. 

And here is something that should matter to you almost as much as the company itself: the structure you use to own it. Get access to a company like this the wrong way and you are left holding a position with no one watching it. Get it the right way and you have a partner. Hold that thought, because we will come back to it. 

A lot of value is made before the IPO, not after 

There is a structural reason your advisor’s old playbook keeps failing. Great companies are staying private far longer and raising enormous sums before they ever ring the opening bell. By the time the public can finally buy in, a huge share of the value has already been created and captured by the people who got in privately years ago. 

SpaceX is the textbook case. Baron started buying in 2017. Over roughly nine years his firm turned about $2 billion into a position worth around $25 billion, a compound annual return north of 50%, before most investors could buy a single share. Last Friday’s IPO did not create that wealth. It simply revealed it, and handed it to the people who showed up early.¹

This is not just a SpaceX story. Leading companies in artificial intelligence, defense technology, and humanoid robotics are all live examples of the same dynamic playing out right now in the private market. Some have multiplied in value several times over in just a couple of years, without ever trading a single public share. The lesson is not buy every IPO. The lesson is the reverse: a great deal of the value is now created before the IPO, while the company is still private. If your only tool is a brokerage account that buys public stocks, you are arriving at the most important part of the game after much of it is already over. 

Why most advisors flinch 

So why won’t your advisor talk about SpaceX? Because they know the typical IPO pattern, and the pattern terrifies them. 

Newly public stocks tend to follow a script. An initial pop, then a brutal drawdown that can erase half the value or more, then, for the great ones, a long climb to numbers nobody imagined. Advisors look at that middle part, the 50% drawdown, and they picture angry clients and closed accounts. So they never bring it up. 

What they miss is that the scary middle part is exactly what a Bucket 3 investment is supposed to do. You are not buying smoothness. You are buying the right to a life-changing outcome, and volatility is the toll you pay for the trip. The history is not subtle, and the most relevant comparison sits right at the top, because it is the other Elon Musk company that made Baron a fortune: 

Company
Tesla
The IPO	$17, June 2010
The Drawdown	Years of skepticism and what Musk called production hell, with at least five separate declines of more than 30%, including a 61% drop in 2022
The Recovery	Largely written off for years before a historic run
The Long Game	About +28,500% (roughly 290x). A $10,000 IPO stake grew into well over $1 million.
Facebook (now Meta)
The IPO	$38, May 2012
The Drawdown	Fell to about $17.55 by September 2012, a drop of roughly 50%
The Recovery	Did not reclaim the $38 IPO price until August 2013, about 14 months later
The Long Game	About +1,400% (roughly 15x). From $38 to about $590 a share; now a $1.5 trillion company.
Amazon
The IPO	$18, May 1997
The Drawdown	Lost more than 90% of its value in the 2000 to 2001 dot-com crash, falling below $10
The Recovery	Took years to recover, then compounded relentlessly for two decades
The Long Game	Over +300,000% (more than 3,000x, split-adjusted). A $10,000 IPO stake became a multimillion-dollar position.

Company	The IPO	The Drawdown	The Recovery	The Long Game
Tesla	$17, June 2010	Years of skepticism and what Musk called production hell, with at least five separate declines of more than 30%, including a 61% drop in 2022	Largely written off for years before a historic run	About +28,500% (roughly 290x). A $10,000 IPO stake grew into well over $1 million.
Facebook (now Meta)	$38, May 2012	Fell to about $17.55 by September 2012, a drop of roughly 50%	Did not reclaim the $38 IPO price until August 2013, about 14 months later	About +1,400% (roughly 15x). From $38 to about $590 a share; now a $1.5 trillion company.
Amazon	$18, May 1997	Lost more than 90% of its value in the 2000 to 2001 dot-com crash, falling below $10	Took years to recover, then compounded relentlessly for two decades	Over +300,000% (more than 3,000x, split-adjusted). A $10,000 IPO stake became a multimillion-dollar position.

Sit with that for a moment. Tesla, the closest analog to SpaceX, handed its believers at least five separate declines of more than 30%, including a gut-wrenching 61% drop, on its way to a nearly 300-fold return.² Every investor who panicked and sold during one of those drops locked in a loss. Every investor who simply held achieved an incredible outcome. 

Facebook and Amazon tell the same story in different decades.³ Same pattern, same lesson: the only reliable way to earn outsized returns is to bear outsized volatility. There is no version of this where you get the upside of SpaceX with the comfort of a savings account. Anyone who promises you both is selling you a fairy tale. 

And here is what should sting: you are paying a full advisory fee for a 60/40 portfolio that anyone could build in an afternoon, while the one conversation that could actually change your wealth never happens at all. 

None of this is a secret. Some of the sharpest investors alive have been saying it out loud for years. 

The shift, by the numbers 

Coatue’s Philippe Laffont, who invests across both public and private technology companies, calls today’s market for new listings “broken beyond repair,” with a tiny fraction of the IPOs the market produced 20 or 30 years ago.

The median company now goes public roughly 13 years after it is founded, up from about 10 years in 2018.

Several of the most valuable companies in the world, SpaceX among them, reached extraordinary valuations while still private, before ordinary investors could buy a single share.

The takeaway: a generation ago, Amazon went public at a market value under half a billion dollars, and ordinary public investors captured the climb to more than $2 trillion.⁴ Today that kind of value is increasingly created, and captured, before the opening bell ever rings.

Missed the launch? Here is how to think about SpaceX from here

Maybe you are reading this having missed the private window entirely. You did not have alternative exposure, and now SpaceX is public. So what should you do? 

Here is my honest take. The third bucket is built for exactly this kind of question, and how much dry powder someone commits at a given price is a personal decision that depends on their own plan and risk tolerance. The real opportunity from this point forward is unlikely to be today’s price. As the table above shows, the great ones rarely go straight up. They tend to hand you a 50% drawdown somewhere in the first year or two. That is not a tragedy. For a patient investor, it is an invitation. 

This is why every serious investor should write down a plan before the storm, not during it: exactly what you want to own, and how much you will buy at specific levels when the market falls a specific amount. Our CEO, Aaron Tuttle, likes to remind our team that bull markets are measured in years, while bear markets are measured in months. The drop does not last long, and it is precisely when the best assets are lower-priced. The investors who build real wealth in volatile assets are not the ones who guess the bottom. They are the ones who decided in advance what they would do while everyone else was panicking. 

The structure problem, and how Chris solved it 

Here is the part that actually changes the game for our clients. 

Most people who do get access to private and aspirational investments get them through a transactional, brokerage-style relationship. You buy the thing, and then you are on your own. No ongoing guidance. No fiduciary is watching the position, sizing it against the rest of your plan, or telling you when the story has genuinely changed. Just you and a statement. 

Our Chief Investment Officer, Chris Arends, built something better. We call it Alts+, short for Alternatives Plus. At its core, the strategy is a fund of funds that gives our clients access to what we believe are the best venture capital and alternative investment managers, alongside select individual companies. It is our best ideas in the alternatives space. But the part I am proudest of is that it is custom-tailored to each client. If you have a genuine conviction about a specific company you want exposure to, you can add it, while staying inside a true advisory relationship with our firm rather than being pushed out to a transactional account where the ongoing analysis and guidance disappear. 

And here is what almost no one else in this industry will tell you. We charge our normal advisory fee on Alts+ assets, the exact same fee we charge on the assets in your first two buckets. We do not earn a commission for putting you into an alternative investment, and we do not earn one for keeping you out. That means when we make a recommendation for any bucket, we are doing it for a single reason: we believe it serves your best interest. No product kickbacks, no hidden incentives, no conflict. The brokerage world often gets paid more to sell you the alternative than to leave you alone, which is exactly why so much of the industry either oversells these products or, more often, avoids them entirely. We do neither. 

That is the ideal home for Bucket 3. You get access, you get personalization, you keep a partner who is paying attention, and you get qualified advice precisely because we are paid the same no matter what we recommend. 

How I run my own third bucket 

I am not asking you to do anything I have not done myself. Here is how my own third bucket is built. 

It runs across a couple of accounts and holds a few different things: a venture capital fund and other alternative investments for diversified private exposure, and a concentrated sleeve of individual high-conviction positions, weighted toward the companies I believe are building the future. 

I hold those most aspirational positions for the next decade, not the next week. I fully expect any one of them to hand me a stomach-churning drawdown along the way. When it happens, I will not flinch, because I sized each position on purpose and I decided in advance what I would do. 

I will also tell you the unglamorous part. One of the largest positions in this bucket is down double digits right now, today, as I write this. I have not touched it. That is not stubbornness. That is what correctly sized conviction looks like, and it is the entire reason buckets one and two exist: so that a red number in bucket three changes nothing about how I live. 

More recently, I added fresh capital to a hybrid fund built to own leading technology companies on both sides of the IPO line, including innovative businesses that are still private and beyond the reach of most investors. I am not trying to nail the perfect entry. I am following the same plan I just described to you: decide in advance, then act with discipline when the opportunity arrives. 

None of this happened because I am clever. It happened because I sized each piece correctly inside a sound plan, I accepted the volatility, and I let the winners run. It also did not happen smoothly. That is the entire point. 

If this made you a little uncomfortable, good 

That discomfort is the same one that has kept your current advisor quietly complacent. The difference is whether someone is willing to have the conversation with you, instead of around you. I believe deeply that you and your family deserve better. 

A few important notes. Conversations about specific private investments are limited to accredited investors, so the first step is a short qualification that lets us talk specifics responsibly and within the rules. If that is you, you can begin the conversation below. 

So ask the hard questions. Especially the ones your last advisor did not want to answer. 

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