These are the words of Jawad S. Mian, the author of the book Stray Reflections. With a difficult year – for the markets, at least – coming to an end in a matter of hours, it is only natural to immerse oneself in an introspective mood. One such reflection relates to the weird connection between the space race and the end of stock market bull runs.
The fault lies squarely with Jeff Bezos and Richard Branson. Let me explain. 🧵 — Jawad Mian (@jsmian) December 27, 2022 Back in July 2021, when one of the longest bull markets in history was still very much alive, Jawad S. Mian penned an interesting article to explore the connection between hyped-up space flights and the health of the financial markets. Of course, some would say that a correlation does not imply causation, and rightly so. Nowhere does Mian infer that space flights somehow affect the underlying market dynamics. Rather, the space flights that garner quite a lot of buzz are usually a symptom of the underlying euphoria in society as a whole, with bull markets merely representing that ecstatic impulse. Let’s delve deeper. Russian Cosmonaut, Yuri Gagarin, became the first person ever to journey into space on the 12th of April 1961. In the runup to this historic space flight, stocks soared. In fact, the S&P 500 recorded a cyclical zenith in 1962 and then plunged by 30 percent in 1962. Similarly, the market crashed by more than 30 percent over the 18-month period following the announcement of the Apollo 11 crew members on the 09th of January 1969. Coming to the turn of the century, the American businessman Dennis Tito spent $20 million in early 2000 to become the first private citizen to enter space. By the time of his actual space flight on the 28th of April 2001, the Dotcom bubble had burst, precipitating a 60 percent plunge in the Nasdaq 100 index. On a similar note, the gaming tzar Richard Garriott announced his plans to spend around 12 days aboard the International Space Station (ISS) on the 28th of September 2007. Naturally, the subprime mortgage crisis started to unwind just a week after this announcement. Garriott flew into orbit on the 12th of October 2008, just a few days before Lehman blew up. This brings us to the end of the last major bull run. Readers would remember that a high-stakes space race was all the rage back in 2021 as Blue Origin’s Jeff Bezos and Virgin Galactic’s Richard Branson competed to become the first billionaire to enter space. Virgin Galactic completed its fourth rocket-powered spaceflight and first fully crewed one In July 2021, carrying Branson into space. However, Blue origin contended that Branson did not actually enter space as the space flight did not cross the Karman line – a theoretical boundary 100 kilometers above sea level. Of course, Bezos’ own foray into space took place just a few days later. Predictably, the S&P 500 peaked on the 31st of December 2021. So far in 2022, the index is down over 20 percent. Do you think hyped-up space flights can serve as an accurate barometer of the froth in the market? Let us know your thoughts in the comments section below.
