Space: The Last Frontier of Investing

Humans are a highly curious species. Without our curiosity, we would never learned how to walk on two legs, nor would we have left Africa, how to use tools, craft weapons, how to farm, to write, teach, calculate, do science, and build the modern world as such!

Curiosity is imprinted in our hardware.

We have been to all corners of our planet. Nowadays, adventurers need to book well in advance and even line up to climb the peak of Mt. Everest. Teenagers are crossing the Atlantic with their self-built boats and submarines can almost dive to any place deep down in our oceans.

Where is the feeling of adventure or the excitement of discovering something new?

It’s gotten truly crowded on this planet indeed.

Luckily, we never stopped exploring. Back in 1969 we even made it to the moon! It’s soon going to be 50 years ago since the last people have been up there. 50 years! However, it seems that some new catalysts are starting to push space exploration forward once again now.

The mind that opens to a new idea never returns to its original size.

Albert Einstein

Luckily, we never stopped exploring. Back in 1969 we even made it to the moon! It’s soon going to be 50 years ago since the last people have been up there. 50 years! However, it seems that some new catalysts are starting to push space exploration forward once again now.

Nowadays, we’re talking about living on an overcrowded planet, having too little food or resources, global warming, a pandemic spreading uncontrolled through our population, all that stuff. While up there, you see, there another world is waiting for us! The sky is not the limit. It goes further than that. Up there, growth potential is literally unlimited.

There was the moment I travelled with my family through Iceland and glanced up into the sky. Looking at all the stars up there, I was thinking to myself: “Look at all the unclaimed real-estate up there!”. Can you imagine just how exciting it must have been for the likes of Christopher Columbus to explore the world?

The last frontier so to say is space.

Space exploration!

It’s human nature to stretch, to go, to see, to understand. Exploration is not a choice really; it’s an imperative.

Michael Collins

We might not all get the chance to leave gravity behind during our lifetime, however, there is another way to potentially profit from this upcoming golden age of space exploration: As an investor!

Whenever new frontiers had to be explored in history, resources got collected and pooled.

Did you know the first company to issue stock was the Dutch East India Company?

Yes, it was the Dutch East India Company who conducted the world’s very first initial public offering (IPO) back in 1602! The exciting part was you could now invest into the collective effort of exploring the Far East. The risk of unprofitable voyages due to unpredictable spice supplies, pirates, wars, and other eventualities simply got diversified. In 1634 the company played an essential role in modern history’s first stock market crash linked to tulip bulbs the company also carried in 1634. But that’s another story.

Today [March 30, 2021] is the day ARK Invest launches its Space Exploration ETF (ARKX) for anyone eager to invest into the opportunities and risks of this next chapter of humanity.

The current estimation is space exploration and related industries are bound to grow 6% year over year and there is literally no growth cap in sight.

The potential is truly unlimited for the patient long term investor.

I think we are at the dawn of a new era in commercial space exploration.

Elon Musk

What is ARKX [the fund] investing in?

The fund will be investing around 30% in orbital aerospace technologies, around 5% suborbital aerospace, roughly 25% in enabling technologies and 40% into aerospace beneficiaries. As such, it aims to capture long-term growth opportunities with low correlation of relative returns compared to more “traditional growth strategies”. For me, this ETF is a satellite investment, a growth story that I wouldn’t want to miss and can participate with some exposure.

The fund is holding just short of 40 positions at its launch day, not all are immediately closely associated with space exploration as such, check it out yourself (click on the picture for most updated version pls):

Besides Elon Musk who is re-designing rocket engineering with astonishing results there somehow seems to be a new space age in the making. It ranges from new satellites, communication systems, new experimental agriculture, imagining and much more.

The whole field could become the new “gold rush” of the century.

How much am I planning to invest into this new field?

To stay with the space analogies, this is a satellite investment for myself. I will not be putting my nest-egg into this. It’s going to be around 1% of my net-worth to be transparent with my readers. There will be rockets blowing up, set-backs, fights and new challenges to overcome. This is not “sailing the ocean” in sunny weather!

Only invest what you call “risk capital” for now.

How much can you earn investing into this highly risky idea?

Fact is, I don’t know.

Nobody knows.

If I’d tell you here on the spot you’d be making XY% annualized from this over the next two decades:

I’d be lying.

Since I don’t want to lie, why don’t I share with you what I do believe to know instead:

The potential is limitless.

Space exploration will become a high growth area going forward.

While entry barriers for new competitors remain super high for now, the cost of going into space is falling like never before. It’s still a very capital intense and innovation driven industry. Whoever gets their foot into orbit first will have a tremendous head start and advantages to capitalize over the next decades.

But since we don’t know who will win this race, buying a thematic ETF managed by one of the most skilled stock-pickers on the street does not seem like a bad idea to me.

Let’s do an exercise: Imagine you have a time machine, and you can travel back in time. What would you tell the people you meet if you travelled back to:

Early 1800’s: The beginning of the “Industrialization”?

Late 1800’s: The invention of the “automobile”?

Late 1990’s: The beginnings of the “New Economy”, and Internet?

Now think ahead, what if your great-great-grandson would get his hands on a time machine in 2150 and could travel back to you in 2021, what would he like to tell you to do?

If this is not convincing enough for you, then please do not invest or invest a very small position only. The product might be too risky for your risk appetite.

While we’re getting ready for take-off now, the ARKX ETF is the first ETF launch in two years, it’s highly likely we will see a lot of demand simply by the sheer publicity they will receive. This is highly anticipated considering the historical performance of ARKs sister products.

No matter how this will play out in the near term, I do expect ARKX to be at the forefront of the next space race going into the future!

Now, let’s boldly go where no man has gone before!

Initiating count-down…

10, 9, 8, 7

Whatever you invest, this post is in no way a purchasing or investment recommendation but merely sharing of personal opinions, please do your own research!

Thanks for reading and I shall keep adding more articles about [the future of] investing, money and more going forward. If you didn’t subscribe to Financial Imagineer yet, consider subscribing by email in the box below, like my Facebook page or follow Financial Imagineer on Twitter.

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