On IPOs: No Called Strikes in Investing
June 23, 2026
by Bradley Wallace, CFA®
Aside from the wheel, written language, the printing press, electricity, automobiles, aviation, the internet and smartphones, we are living in a time of unprecedented technological innovation. In all seriousness, it’s fascinating to step back and think about the advancements taking place right before our eyes, particularly with Artificial Intelligence and space technology. And the beauty of the global capital market system is that great ideas, great technologies and great businesses attract funding required to move these innovations forward. But for long-term investors, distinguishing between an idea and an investment is important when innovations and investments become overly conflated.
With the expected IPOs of SpaceX, Anthropic and OpenAI (surely more to follow), investors will be able to express their excitement with their savings. But often times with investing, excitement and discipline are contradictory. It can feel as if not investing in one of these companies means you don’t believe in the future of their technologies. However, investing in a new and exciting technology and supporting it are mutually exclusive. In fact, investing is one of the rare activities where you are not punished for doing nothing. As Warren Buffett says, unlike baseball, there are no called strikes in investing. If you don’t swing at a pitch (or three) that isn’t prudent for you and your long-term strategy, you don’t strike out. Sure, you might miss out on big upswings in the early years of a new company, but you might also miss the large declines and heightened volatility of a new issue. In investing, it’s possible to miss on every new exciting investment opportunity and still achieve all of your objectives.
This concept is especially important for both creators and stewards of generational wealth. Generational wealth is typically created through patient, focused, thoughtful risk taking and decades of sacrifice. Speculating with any meaningful portion of that introduces very asymmetrical outcomes. For example, a good thought exercise for those who have accumulated generational wealth is to ask a simple question: if I were to risk any meaningful sum of my wealth on this speculative investment, how would my life be different if it were to double or go to zero? Behavioral finance and prospect theory teach us that humans are generally loss averse, where the loss of $500 hurts much more than gaining $500 feels good.
Shifting gears, let’s say an investor ultimately does want to swing at one of these upcoming IPO “pitches” because they’re sure it’s going to be the next Amazon (and not the next pets.com, webvan, etoys.com or DrKoop). Investing early in a secular “winner” is only one part of the challenge. In order for an early investor in Amazon’s stock to have realized the ~30% annualized return since going public, said investor not only had to purchase the stock early but, perhaps even more challenging, they had to not sell the stock during very large drawdowns through the years that followed. From its highs, Amazon’s stock price fell nearly -95% during the tech bubble collapse, another -64% during 2008 and -50% more recently in 2022. So while Amazon’s stock has averaged nearly 30% annually for three decades, most early investors did not have the equanimity to hold this volatile stock through the ups and downs. Investing well over the long-term has much more to do with knowing yourself than it does with knowing which new stock is going to be the next Amazon. Unlike baseball, there are no called strikes.
History is full of transformative technologies that changed the trajectory of the world, while also delivering disappointing returns to investors who paid too much or took too much risk. Sometimes the more rational decision is to simply appreciate these advancements from the sidelines. What a cool moment we are all fortunate to be living through.
This material is provided for informational and educational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. References to specific companies are for illustrative purposes only and should not be interpreted as investment recommendations. Past performance does not guarantee future results. Investing involves risk, including the possible loss of principal. Opinions expressed are current as of the date of publication and are subject to change without notice.
