THE DEAN’S LIST: The Coming Flood of Equity Supply

NVIDIA beat while most equity indices approached records. And yet the 10-year yield quietly hit a one-year high, and rate hike odds climbed to a coin flip. The surface looks calm. Underneath, the plumbing is shifting.

This is exactly the kind of moment the Single-Digit Millionaire portfolio was built for. Take a look at our asset allocation. When rates rise and new supply floods in, the boring discipline of diversification stops being boring. It becomes the whole ballgame.

Dean’s note:
Let me talk about something almost nobody is discussing, because it is the kind of slow-moving force that does not make headlines until it is too late to react.

Equity supply. The amount of stock available to buy.

This week, SpaceX filed its IPO paperwork. The reported target is a valuation near $1.7 trillion, with a raise that could reach $80 billion. That would be the largest IPO in history by a mile. And it is not alone. OpenAI is reportedly preparing to file in the coming weeks at a valuation north of $1 trillion. Anthropic is circling around a deal in the $900 billion range. There is a parade of giants lining up to come to the public.

Now, here is the part worth sitting with. Think back to 1998 through 2000. There were hundreds of IPOs back then, valued collectively at hundreds of billions, maybe approaching a trillion dollars. But the market they were entering was worth $15 to $20 trillion. The new supply was a rounding error against the size of the ocean.

Today is different. Later this year and into 2027, we may get far fewer public offerings. But each one will be worth a far higher percentage of this $60 to $70 trillion market. SpaceX alone, at $1.7 trillion, would be larger than all but a handful of companies on Earth. When that much new stock comes to market, the money to buy it has to come from somewhere. It comes out of existing positions.

Certainly not all the shares unlock at once. Insiders are locked up. Offerings are staggered. But the direction is clear. That is strike one for this bull market.

What are strikes two and three? Well, remember the 2000s. You had a hawkish Fed raising rates into a weakening, dot-com-led Nasdaq. Sound a little familiar? Odds of a rate hike just hit 50% this week. And then came September 11, 2001. A geopolitical nightmare nobody saw coming, on top of an already fragile market.

I am not predicting a bear market this year. But I have lived through enough cycles to notice when the setup starts to rhyme with a previous one. History does not repeat. But it sure can rhyme. And right now, I hear a familiar tune.

A choppy week defined by rising yields, Nvidia's earnings, and a record-breaking IPO filing. Here is how it played out:

Monday (May 18): A rough start. The Nasdaq and S&P 500 both sank as the 10-year Treasury yield hit its highest level in a year. The bond market, not the stock market, set the tone. Investors spent the day bracing for Nvidia's earnings later in the week and digesting the lack of substance from the Trump-Xi summit. The probability of a rate hike this year climbed toward 50%.

Tuesday (May 19): The S&P 500 fell for a third consecutive day as Treasuries took off again. The 30-year yield pressed near 5.10%, close to its highest since 2007. This was the day the rate story moved from background noise to front-page concern. Higher yields pressure valuations, and the market felt it.

Wednesday (May 20): The comeback. The Nasdaq jumped 1.54%, the Dow rose 1.31% to retake 50,000, and the S&P 500 added 1.08%. Technology and consumer discretionary led, each up over 2%, as the market positioned ahead of Nvidia. After the close, two huge things landed. Nvidia reported earnings: revenue of $81.62 billion (above the $79.19 billion expected), adjusted EPS of $1.87 (above $1.77), a 75% gross margin, and Q2 revenue guidance of $89 to $93 billion. Strong across the board. And SpaceX filed its long-awaited IPO prospectus, revealing its finances for the first time.

Thursday (May 21): The morning after. Despite Nvidia's beat, the S&P 500 slipped 0.31%, dragging the semiconductor group with it. This is the classic "buy the rumor, sell the news" pattern. Walmart fell nearly 2% after issuing a weaker-than-expected full-year outlook, citing higher fuel costs tied to the conflict in Iran. And reports emerged that OpenAI plans to file for its own IPO in the coming weeks at a valuation potentially north of $1 trillion.

Friday (May 22): A quiet, positive close before the long holiday weekend. The Dow rose 294 points to set a new record high. IBM was the standout, jumping over 12% on strength in its software and AI consulting business. The Russell 2000 gained 0.93%. The S&P 500 added a modest 0.17%, with eight of eleven sectors green. Bond yields eased slightly off their highs, giving stocks room to breathe into the weekend.

Here is a simple truth about markets that gets forgotten in every bull run: price is set by supply and demand, not just by earnings.

For the past three years, the supply of stock has been shrinking. Companies bought back their own shares at a record pace. A few large firms went public. The great private giants, the SpaceXs and OpenAIs and Anthropics of the world, stayed private, soaking up capital in private rounds without adding a single share to public markets. Less supply, steady demand, prices go up. Simple.

That is now reversing. SpaceX filed this week at a reported $1.7 trillion valuation, targeting up to $80 billion raised. OpenAI is reportedly weeks away from filing at over $1 trillion. Anthropic is circling $900 billion. These are not small companies tiptoeing into the market. These are some of the largest entities on Earth preparing to absorb enormous amounts of investor capital.

Dean’s note:
When a $1.7 trillion company goes public, the money to buy those shares does not appear from thin air. It is reallocated from the stocks people already own. That is mechanical. It is not an opinion. Now, the lockups mean this happens gradually, over quarters and years, not in a single day. So this is not a reason to panic or sell anything tomorrow.

But it is a headwind that almost nobody is factoring into their thinking right now, because everyone is staring at Nvidia's gross margin instead. The smart move is not to flee. It is to ensure you own the highest-quality names, along with diversification far from them, too.

I lived through the dot-com era as a baby investor. I remember the IPO mania of 1998 to 2000 vividly. I bought them in my Jack White trading account while attending UCSD. Pets.com. Webvan. Hundreds of companies were going public, many with no profits and little to no business plan.

But here is the thing: people misremember. As wild as that supply flood was, the total dollar value of those IPOs was modest relative to the market. You had hundreds of offerings worth, collectively, hundreds of billions, perhaps approaching a trillion, against a market capitalization of $15 to $20 trillion. The new paper was a stream flowing into an ocean.

Today, the math is inverted. We will likely see far fewer IPOs over the next two years. But the ones that come will be massive. A single SpaceX listing at $1.7 trillion is worth more than the entire late-1990s IPO wave, inflation-adjusted. And it is entering a market of roughly $60 to $70 trillion. The supply is more concentrated, but proportionally just as heavy, maybe heavier.

Dean’s note:
Fewer, bigger offerings change the character of the risk. In 1998, the danger was a thousand tiny boats with holes in them. Today, the danger is a handful of supertankers, each one big enough to move the tide when it docks. The lesson is not that IPOs are bad. SpaceX is a genuinely extraordinary company. Don’t get too caught up in punditry telling you the lurid tails of its S-1.

Nobody questions Elon and he has earned his stripes as a financial market magician at this point. The lesson is about capital flows. When trillions in new equity come to market over two years, valuations across the board feel the gravity. Elon can do zero about this. And do not assume the demand that lifted everything for three years will absorb this new supply without a ripple.

NVIDIA did everything right. Revenue of $81.62 billion, beating estimates. Adjusted earnings of $1.87, beating estimates. A stunning 75% gross margin. Q2 guidance well above what Wall Street expected. CEO Jensen Huang continues to describe a trillion-dollar order book stretching through 2027.

And the next day, the stock fell, dragging the semiconductors down with it.

Why? Because expectations had already climbed to the moon. When a stock is priced for perfection, even perfection is not enough to push it higher. The good news was already in the price.

Dean’s note:
This is one of the most important lessons in all of investing, and Nvidia just demonstrated it for free. A company's quality and its stock return are two different things. NVIDIA is a magnificent business. But after a 19% run higher this year heading into earnings, the stock needed not just a beat but a blowout that redefined the future. It got a beat.

A beat is not enough when you are priced for a miracle. Great companies can be poor investments if you pay too much. Watch the price you pay, not just the logo on the door.

While everyone fixated on Nvidia, the 10-year Treasury yield quietly climbed to its highest level in a year. The 30-year pressed near 5.10%, close to levels not seen since 2007. The probability of a rate hike this year reached 50%, a genuine coin flip. This honestly wasn’t in my crystal ball for 2026.

This is the story under the story. The Federal Reserve has not raised rates. But the bond market is doing the tightening on its own, because inflation from the oil shock has proven stickier than hoped. April CPI came in at 3.8%. The new Fed chair, Kevin Warsh, inherits an inflation problem he did not create and a market that is nervous about what he will do.

Dean’s note:
Rising long-term yields are the quiet assassin of frothy markets. They do their damage slowly, then all at once. Here is the mechanism in plain English: when you can earn 4.6% risk-free in a Treasury bond, the bar for owning a richly valued stock goes up. Why take the risk of an expensive tech stock when a government bond pays you nicely to do nothing?

As yields rise, money does the math, and some of it leaves stocks for yield. That is the pressure. Combine it with the coming wave of new equity supply, and you have two forces pulling in the same uncomfortable direction. I am not ringing an alarm bell. I am pointing at the gauges and calmly saying that two of them are flashing yellow.

When the setup starts to rhyme, you pay attention. You do not panic. You prepare.

A choppy week. NVIDIA beat and fell. The Dow hit a record. Bond yields hit a one-year high. And the biggest IPO in history filed its paperwork. Underneath the calm surface, the tide is shifting.

•  Equity supply is the slow-moving headwind nobody is pricing in. SpaceX filed this week at a valuation of nearly $1.7 trillion. OpenAI and Anthropic are close behind. Unlike the 1998 to 2000 flood of hundreds of small IPOs against a $15 to $20 trillion market, we will get fewer but far larger offerings against a $60 to $70 trillion market. Proportionally, the supply is just as heavy. Strike one for the bull.

•   A hawkish Fed leaning into a richly valued, tech-led market is strike two if it materializes. Odds of a rate hike just hit 50%. The 10-year is at a one-year high. This rhymes with the early 2000s, when a tightening Fed met a top-heavy Nasdaq. History does not repeat, but it rhymes.

•   Strike three, by definition, is the thing nobody sees coming. In 2001, it was a geopolitical shock. I do not know what it would be this time, and no one else does either. That is the nature of a third strike. The point is not to predict it. The point is to be diversified enough that you survive it.

•   Nvidia beat, and the stock fell. Let that lesson sink in. When a stock is priced for a miracle, a mere beat disappoints. The quality of the business and the stock's return are not the same thing. Watch the price you pay.

•   The bond market is the adult in the room right now. The 30-year is near 5.10%, the 10-year is at a one-year high. Rising yields raise the bar for every stock you own. When safe money pays well, risky money has to justify itself.

•   IBM jumped 12% Friday on AI consulting strength. SpaceX, Walmart's weak outlook, the IPO wave. The dispersion is widening. Some names thrive, some stumble. That is what a maturing bull looks like. It rewards selectivity and punishes laziness.

•   Keep contributing to your 401(k). The $24,500 limit is in effect. The $35,750 super catch-up for 60 to 63-year-olds is there if you qualify. None of what I wrote above changes the discipline of regular contributions. In fact, a choppier market is exactly where dollar-cost averaging earns its keep, buying you more shares when prices dip. Show up. Every paycheck.

Here is where I land. The bull market is not dead. The economy is still bending, not breaking. NVIDIA is still printing money. The AI buildout is still real. But the easy part of this rally, the part where everything went up together on a tide of shrinking supply and falling fear, that part is probably behind us.

What comes next rewards the disciplined and punishes the greedy. A flood of new equity supply is forming on the horizon. The Fed is leaning hawkish. And somewhere out there is a risk none of us can name yet. None of that means run for the exits. It means maintaining your own quality, staying diversified, keeping some dry powder, and knowing when you should leave the chase for the shiny thing everyone else is chasing.

Stay calm. Stay invested. Stay selective. And keep your eyes on the gauges.

- Dean

P.S. The number that sticks with me this week: $1.7 trillion. That is the reported valuation SpaceX is targeting in its IPO. To put that in perspective, that single company would be worth more than the entire late-1990s IPO wave combined, adjusted for inflation. One company. And it is just the first of several giants lining up. I am not telling you to avoid the SpaceX IPO. It may be a wonderful long-term holding. I am telling you to understand what a parade of trillion-dollar listings does to the supply and demand of the whole market. The money to buy all that new stock has to come from somewhere. Usually, it comes from the stocks you already own.

And one more thought. Everyone remembers the dot-com bust as a story about bad companies. Pets.com and the rest. But that is only half the story. The other half is that even good companies, like Amazon and Cisco, fell by 80% or more before recovering. Amazon was a great business in 2000 and a terrible stock for two years. The lesson is not about picking good companies. It is about not overpaying, staying diversified, and respecting the math of supply, demand, and interest rates. Those forces do not care how brilliant the company is. They move the price anyway. The investors who understood that in 2000 lived to buy the bargains in 2002. Be one of those investors.

👉 What if building real wealth in 2026 isn't about reacting to every headline, but about having a plan that works in any environment? My Single-Digit Millionaire portfolio shows how to mix stocks, cash, gold, and even bitcoin in a way that protects you and gives you room to grow. Check it out to see why this balanced approach could quietly put you ahead while everyone else is guessing.

This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.