A Flood Of New Stock Tickers Are About To Hit The Market

Ben Inker, GMO's Head of Asset Allocation, on the wave of large IPOs expected this year (SpaceX among them): "We are likely to be in a situation where over the next twelve months, we see more supply come into the US stock market than has been the case in living memory." He put the figure at "five or six percent of aggregate US market cap coming in as supply." On the timing of the impact: "It's not when an IPO occurs, it's kind of in the twelve months afterwards." And the historical rule of thumb he cited: "A one percent increase in supply is associated with a seven and a half percent worse return over the subsequent year." Source: Ben Inker (GMO), via Excess Returns podcast

Most of the bubble debate is about valuation and AI economics. This is a separate, mechanical force that doesn't need a catalyst to bite: supply and demand for the stock itself. When a large volume of new shares comes to market — through IPOs like SpaceX and secondary raises — that stock has to be absorbed by the same pool of money already invested. If Inker's rule of thumb holds, five to six percent of new supply is a heavy mathematical headwind on forward returns, independent of what earnings or the economy do. And it compounds the financing theme this framework already tracks: the same companies raising record debt and equity to fund the AI buildout (recent multi-billion bond sales and equity raises) are part of the same wave of paper the market must absorb. The dilution is the quiet drag underneath the loud story.