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This Is What Normal Looks Like
Hoxton Blog • This Is What Normal Looks Like
If you only read the headlines this week, you could be forgiven for thinking investors were running for cover.
US inflation climbed to its highest level in three years. The European Central Bank raised interest rates for the first time since 2023. Tensions in the Middle East escalated. Stock markets sold off sharply on Wednesday before stabilising later in the week.
And then Friday arrived.
SpaceX Hits the Stock Market
SpaceX began trading on the Nasdaq under the ticker SPCX in what became the largest stock market launch in history.
The company raised $75 billion in a single day, more than all US IPOs across 2024 and 2025 combined. The listing briefly pushed founder Elon Musk's net worth beyond the $1 trillion mark and instantly became the dominant talking point across financial markets.
The scale of demand was remarkable.
But perhaps the timing was even more remarkable.
Investors had spent most of the week digesting higher inflation, rising interest rates and geopolitical tensions. Yet at the very same time, they were committing enormous amounts of capital to a business whose biggest opportunities may still be years away.
That may seem contradictory. It isn't.
In many ways, it perfectly illustrates how markets actually work.
Why Investors Are Excited
SpaceX is no longer simply a rocket company.
Its largest business today is Starlink, a satellite broadband network serving more than 10 million subscribers globally, many in locations where traditional internet infrastructure does not exist.
The company also holds significant contracts with NASA and the US military, while investing heavily in emerging opportunities ranging from next-generation launch systems to space-based artificial intelligence infrastructure.
For many investors, the attraction is straightforward.
Starlink revenues are expected to continue growing rapidly. SpaceX already launches more rockets than any nation on Earth. The company is expected to join the Nasdaq 100 shortly, which will result in automatic buying from index funds and ETFs around the world.
Whether those growth projections ultimately prove correct remains to be seen. But the market is clearly placing a substantial value on SpaceX's future potential.
Why Some Investors Remain Cautious
As with every investment story, there are risks.
The company continues to invest heavily and is not yet generating profits consistent with its valuation. Starship, its next-generation rocket programme, remains in development. A meaningful portion of revenue comes from government contracts, which can change with political priorities and budget decisions.
There is also the question of leadership concentration. Elon Musk retains approximately 80% of voting control while simultaneously leading multiple major businesses.
None of these risks make the company unattractive. They simply explain why opinions on valuation vary so widely. And that is precisely the point.
Markets are never driven by a single narrative.
At any given moment, some investors are focused on risks while others are focused on opportunities. Some are looking at next quarter's inflation report. Others are looking at where technology might be in 10 years.
Both groups are participating in the same market.
The Week in Brief
| Topic | What Happened | Why It Matters |
|---|---|---|
| Inflation | US prices rose 4.2% over the past year, the highest reading since 2023. | Higher energy prices linked to Middle East tensions drove most of the increase. Underlying inflation changed very little. |
| ECB | The European Central Bank raised rates to 2.25%. | The move reflects concerns around energy-driven inflation and higher price pressures. |
| Markets | Equities fell sharply on Wednesday before recovering. | Investors reacted to inflation data before regaining confidence later in the week. |
Falling Is Not the Exception. It Is the Norm.
Here is the US stock market since 1950. The shaded areas represent every period when the market traded below a previous high.
Take a moment to look at how much of the chart is shaded.
Markets spend a remarkable amount of time below previous peaks. Declines are not rare interruptions to an otherwise smooth journey higher. They are part of the journey itself.
Every shaded section was accompanied by headlines that felt alarming at the time. Wars. Oil shocks. Recessions. Banking crises. A global pandemic.
Yet despite all of that, the market moved from below 20 in 1950 to more than 7,200 today.
The declines were real and the fear was real. But so was the long-term progress.
Small Wobbles Are Common. Big Ones Are Rare.
The lesson is straightforward.
A 5% decline has happened 73 times. A 10% correction has happened 26 times. Yet declines of 30% or more have occurred only six times in the past 75 years.
The human mind tends to assume the worst. When markets wobble, it is easy to imagine catastrophe. History suggests otherwise.
Most declines are temporary setbacks. The catastrophic outcomes investors fear most are relatively rare.
What This Means For You
The SpaceX story and the market charts tell the same story.
Markets can hold fear and optimism at the same time. They can worry about inflation while funding innovation. They can react negatively to economic data while remaining optimistic about long-term growth. Most importantly, they can experience setbacks without changing their long-term direction.
Our clients already have exposure to SpaceX through the diversified ETFs and index strategies we hold, including Nasdaq-focused allocations where SpaceX is expected to become a meaningful constituent.
That means we are not watching this story from the sidelines. Equally, we are not rushing to make concentrated bets on a single company whose long-term earnings profile is still developing.
For us, the lesson is the same as it has always been.
Stay diversified, stay disciplined, stay focused on the long term.
When markets feel uncomfortable, remember that discomfort is not a sign that something has gone wrong. It is often a sign that markets are behaving exactly as they always have.
This is what normal looks like.
If you would like to discuss how current market conditions affect your portfolio or financial plan, speak to your adviser or contact our team at client.services@hoxtonwealth.com or on WhatsApp at +44 7384 100200.
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