In the age of the $1 trillion IPO and ETF, it’s not different this time
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Peter Lynch, arguably the most successful fund manager of all time, retired from Fidelity Investments in 1990 at the age of 46. His Magellan Fund (FMAG) had achieved an average annual return of 29% over 13 years and was wildly popular with small investors, boasting more than $14 billion in assets.
At the same time, an index fund tied to the S&P 500 by Vanguard also was starting to make a run as American investors put about 15% of their household wealth into stocks. Today we collectively have more than a third of our wealth in stocks and Vanguard holds two funds and now an ETF (VOO) with more than $1 trillion in assets each.
In between, the country has gone through four official recessions and one global financial crisis (which we caused), but stocks keep roaring.
Next week, we will likely see the first trillion-dollar IPO when Elon Musk’s SpaceX (SPCX) goes off at an estimated valuation of $1.75 trillion. Later this year, AI giants Anthropic and OpenAI will go public to much hype as well.
Clean energy IPOs and merger activity will also cause spikes in value as the AI giants demand more and more electricity to power their data centers.
But once valuations get too high, and we may be nearing a peak with this AI frenzy, there will be a reckoning of sorts. Despite the common bull market refrain, it’s not different this time.
The lesson here is that while valuations may change and more of us are risking our wealth in the stock market, the dynamic remains the same. We will see corrections and crashes, maybe sooner than we think, but the changing nature of technology and innovation in the economy will always favor equities in the long run.
Like Peter Lynch’s Magellan fund, someday even a $1 trillion valuation will seem quaint.
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Zeus: California takes giant step back on climate
. . . . This week’s California primary for governor was about as bad as it could be for those hoping for a new leader to replace Gov. Gavin Newsom in fighting climate change, writes David Callaway. With the Democratic vote split between a political insider and a progressive outsider, Republican Steve Hilton was running second with millions of mail-in votes still to be counted. If things hold the way they are there will be no climate interests in the governor’s mansion come November. Just more environmental inaction from America’s most populous — and one of its most vulnerable — states.
Thursday’s subscriber insights
Sustainable fund flows on the rebound
. . . . What a difference an oil crisis makes. Sustainable fund flows rebounded in the first quarter after a rough 2025, led by European funds, as investors rethought the potential for green energy.
A net $3.5 billion of inflows were recorded last quarter, rebounding somewhat from outflows of $27 billion in the fourth quarter last year, according to a report by Morningstar Sustainalytics and ESG Today.
Outflows were still reported in the U.S., likely as the markets were weak in March following the start of the Iran war. The report also found that total assets in the sector fell by 10% to $$3.5 trillion.
Passive equity funds and bond funds were the big winners, as investors likely just shifted index assets once the first month of the war was over and oil had somewhat stabilized at higher prices.
Renewable equity prices were among the first to take off after the war started so it’s only natural that investor fund flows followed. The question now is whether the latest Middle East violence will last long enough to generate a sustained shift. So far, it’s looking that way.
Editor’s picks: Weather extremes intensify; plus, El Niño is coming
Watch the video: From stronger hurricanes to longer droughts and heavier rainfall, a warming planet is intensifying weather extremes and making them more frequent. Watch this report from the Associated Press.
WMO warns in El Niño update
The World Meteorological Organization this week joined the chorus of voices warning the world to be ready for extreme weather as soon as in the coming month, due to the El Niño phenomenon. A new WMO El Niño/La Niña update indicates an 80% likelihood of an El Niño event from June to August 2026. Probabilities for this to continue until at least November are near or above 90%. Although some uncertainty remains about El Niño peak strength and timing, most forecast models suggest it will be at least moderate — and possibly strong. “The science is clear: El Niño is arriving on our doorstep in the coming months with 90% certainty. The world must treat it as the urgent climate warning it is. El Niño conditions will pour fuel on the fire of a warming world. Impacts will hit even harder, travel even farther, and cross borders with devastating speed. The only effective response is climate action equal to the crisis — ending the addiction to fossil fuels, accelerating the shift to renewables, protecting the most vulnerable, and delivering early warning systems for all.” said UN Secretary-General António Guterres. The El Niño climate pattern is characterized by the warming of sea surface temperatures in the central and eastern Pacific Ocean. It can cause extreme shifts in weather patterns and result in floods, prolonged drought and heatwaves.
Latest findings: New research, studies and projects
Critical ocean-floor observation network to be dismantled
The Trump administration is dismantling a $370 million ocean-floor observatory network installed a decade ago to collect critical climate data on coastal environments, marine ecosystems and powerful global ocean currents. Oceanographic magazine reports the closure of this climate data network follows policy blueprints laid out by the Heritage Foundation. The shutdown was recommended in their Project 2025 “Mandate for Leadership” document. In 2024, Project 2025’s authors explicitly targeted the network, claiming the Ocean Observatories Initiative was “the source of much of NOAA’s climate alarmism” and advising that “the preponderance of its climate-change research should be disbanded,” according to the report. The NSF said it will begin removing more than 900 deep-sea instruments this month. Monitoring hardware will be pulled from the waters of Oregon, Washington State, Alaska, North Carolina and a critical region between Greenland and Iceland known as the Irminger Sea. Jim Edson, a marine meteorologist who led the initiative, tells Oceanographic that the network was “the world’s most advanced continuously operating ocean observing systems.”
Words to live by . . . .
“As your governor, I will protect our air and water, defend California’s nation-leading climate leadership, and hold polluters accountable — because the future of our children depends on it.” — Xavier Becerra, California gubernatorial candidate and leader in Tuesday’s primary.