Faith in Space – The Catholic Thing

During the high point of investment clubs – back in the dark ages, long ago, in 1998! – mom and pop investors would gather and use a tool such as the NAIC’s “Stock Selection Guide,” to pick stocks based on a ten-year record of sales, earnings, and profitability.

These sober “retail investors” wouldn’t even look at a prospectus. A newly launched company was simply too speculative.  They were looking for long-term plays, as reliable as interest on deposits, but with better returns.  Their problem was not,  “How do we make 20 percent in a few days?” but “What company deserves our hard-earned money, if we do not spend it on household needs?”

But if such folks had considered an “initial public offering” (IPO), they would have regarded it as insane not to study the prospectus.  

Remember what a prospectus is?  After the stock market crash in 1929, Congress mandated that any new company raising money from the general public needed to file a report (“S-1”) detailing its business plan and risks, with audited financial statements.

One might naively suppose that corresponding to a company’s duty to file such a report is the public’s duty actually to read it.  But no one does, in a world where, in an instant with a smartphone, you can bet via Kalshi as to who wins the next game or next election.

Surely, a “Catholic ethics of investing” begins with sobriety.

Does a prospectus perhaps deserve greater weight when demand for a company’s stock seems absurdly high, given the fundamentals  – as in the case of Elon Musk’s SpaceX?

It’s trading at more over 100x its trailing sales (sales, mind you, not earnings, because so far it is not profitable), and its leverage is high.  And yet as of yesterday it had become the fifth most valuable public company by market capitalization, only behind mega-giants like Nvidia and Apple.

The size of its IPO was so disproportionately great that it must say something about our character and even our civic religion.  To get a sense of the size: if the previous largest IPO were a city bus, the SpaceX IPO would be an Airbus jumbo jet.  

Its prospectus also seems important because of the governance of SpaceX.   Shareholders are shut out from suing the company, and Elon Musk controls 85 percent of the votes.  Therefore, to buy SpaceX is effectively to hand money over to Elon Musk.  His vision governs. And his vision is in the prospectus.

The whole spectacle looks so bizarre to me that I want to ask what religious belief, what faith, is inspiring it.

Faith in a “paradigm shift,” not surprisingly: “We believe the next paradigm shift for humanity is the creation of a resilient, perpetually expanding spacefaring civilization that drives continuous innovation across new frontiers, ultimately propelling us to Kardashev Type II status – we believe we are capable of unlocking an era of unprecedented economic expansion, while also contributing to the safeguards of humanity’s future against existential risk.”

Kardashev was a Russian scientist who ranked civilizations as more or less advanced, not on the basis of their philosophy or art, but rather on how extensively they harnessed the energy of their local sun, or even their entire galaxy.

The prospectus in many places reads like a religious tract, not a plain business plan.  It has two sections entitled “Why This Matters Now,” with language like this: 

For the entirety of its existence, human civilization has lived on a single celestial body: Earth. The current paradigm, in which human civilization is confined to one planet, exposes humanity to existential threats that are unpredictable  and uncontrollable on a planetary scale. These threats include naturally occurring catastrophic events – such as asteroid impacts, volcanic activity, or solar fluctuations – as well as man-made global conflicts. Geological and astronomical records indicate a non-zero probability of extinction-level events occurring over periods measurable in millions of years. Reliance on a single planetary home constitutes a single point of failure and carries existential risk with a probability of one that must be solved. By moving beyond the only home we have ever known, we ensure species-level redundancy and that the light of consciousness will not be tied to a single planet subject to the inevitable hazards of a harsh and vast universe. We do not want humans to have the same fate as dinosaurs. We want to give them a reason to look ahead with excitement, with the prospect that we are entering an age of abundance with an endlessly prosperous and exciting future.

SpaceX positions itself as the leader in a new “age of abundance” to be found in space: “space and AI will enable an age of abundance that will lead to an unprecedented expansion in the global economy.” The company will help usher in an “age of abundance that we believe has the potential to propel an unprecedented expansion in the global economy.”

Newman says in one of his sermons that true faith is like a wager.  What would you lose, he says, if Christianity turned out to be false?  That’s the measure of your faith: how much you wagered on its truth.  Faith is a “venture,” he says.  It necessarily means taking a risk.

What risks are owners of SpaceX stocks accepting?  A prospectus must have a “Risk Factors” section.  Perhaps most interesting is this: “Several of our anticipated market opportunities, including certain AI, orbital, lunar, and interplanetary transportation and industrial activities, are still emerging and evolving or do not currently exist, and such markets may not develop as we expect, or at all.”

Perhaps the mission statement already said enough: “Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.” 

That’s its animating faith. “You want to wake up in the morning and think the future is going to be great,” Elon Musk is quoted as saying, in the very first line of the prospectus.