And the rockets' red glare
In 1998, the top five tech stocks were 15% of the total market cap of the S&P 500. Even at the peak in 2000, the tech sector ‘only’ accounted for about 30% of the total market. Today, it's 35%.
Friday, May 29th, 2026
Laramie, Wyoming
By Dan Denning
‘The rocket worked perfectly,’ Werner von Braun reportedly said. ‘Except for landing on the wrong planet.’
He was talking about the Nazi’s V-2 rocket, which terrorized London in the last year of World War II. After the war, and via Operation Paperclip, Von Braun would make his way to Alabama, where he began his long role in developing the US space program, including the famous Saturn V rocket that sent men to the moon.
That’s the thing about rockets. Some of them go to the moon. And some of them blow up on the launch pad. You may have seen the spectacular footage of Blue Origin’s New Glenn rocket going up in flames last night in Florida. It destroyed the rocket, the launch pad, and possibly Jeff Bezos’ dreams of competing with Elon Musk (the New Glenn rocket was due to launch the first 46 satellites for Project Kuiper, Bezos’ version of Musk’s Starlink).
You can learn from a bit of research that yesterday’s mis-hap was not an explosion. Nor was it a conflagration. It was a deflagration. What’s the difference?
In a detonation, the fuel ignites at supersonic speeds as a shockwave compresses all the fuel at once. You get an explosion. In a deflagration, the reaction is at subsonic speeds. The fire spreads rapidly. But it doesn’t explode like a bomb. Which brings me to our updated valuation dashboard this week.
You might argue that if Elon’s main competitor for commercializing space has gone up in flames, that’s good news for SpaceEx. It will IPO with a $2 trillion valuation. All the index trackers will buy it. In fact, it will be so large that market-cap driven index trackers will HAVE to buy it.
Up! Up! And away!
But let’s continue with the thought that the largest IPO in human history may happen at the same time we have the most expensive stock market in US history. The Buffet Indicator–the stock market’s market capitalization as a percentage of GDP–hit 236% this week. Robert Shiller’s Cyclically Adjusted Price Earnings (CAPE) ratio is 42.55, just below the all-time of 44.19 in December of 1999.
Maybe it’s a bit on the nose to say that the stock market is like a giant rocket, fueled with speculative liquidity that’s ready to go up. But in a controlled ascent to higher highs? Or up in smoke and fire?
And if we have a problem on the pad, will it be a detonation, destroying trillions in value quickly and sending shockwaves through the real economy? Or will it ‘just’ be a fire in the sectors that have gone up the most? Hold that thought and look at this chart.
