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Summary: Meloni, Musk Hormuz. These are some of the names that trended in the news this past week. While there’s no doubt that some of the headlines may have moved the markets up (or down), here’s why you should take them with a pinch of salt and not base your investing decisions on them.
Giorgia Meloni didn’t beg Donald Trump for a photograph. And she said so herself, publicly. The story made it sound like something had happened. No, it hadn't. But oh, how the story travelled.
I bring this up not for the gossip, but because the market has been doing something similar all month. It tells stories that sound like facts. Most of it is guesswork, wearing a very expensive suit. Two recent events show exactly how!
#1 US-Iran conflict fails to reach a truce
The Strait of Hormuz, a narrow passage that carries nearly a fifth of the world’s oil, has been disrupted for months, thanks to the ongoing US-Iran conflict.
This week brought the latest swing in that story: the Sensex slipped over 600 (June 19), points on the last day of the previous week. But on Monday (June 22), it opened 300 points up after the first round of the US-Iran talks, conducted in Switzerland, produced a tentative roadmap. Yet, the very next day, the Sensex tumbled sharply by 900 points, as Iran’s military declared the Strait of Hormuz closed. But in Wednesday’s session (June 24), the market recovered around 800 points, on the back of oil prices easing towards pre-war levels.
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Four sharp moves in a week are not what a resolved crisis looks like. The Strait itself remains only partly open, and the real outcome is still being negotiated, day by day.
However, it is important to zoom in on what actually moved: the market did not fall because the Strait closed. It fell because investors assumed the worst was already certain and priced the stock market accordingly. We have seen this pattern before, in extreme form, during the Covid crash, when markets fell more than 25 per cent in a single month on fears of economic collapse. What followed was one of the strongest multi-year rallies in market history. A smaller version of that same instinct is visible now, as the Sensex has fallen more than 13 per cent from its recent peak since this conflict began, with investors pricing in a string of negative outcomes that have not yet fully played out.
The takeaway? A falling market doesn’t always mean something bad has happened. It is telling you something bad might happen. These are different things, and only one of them deserves your attention. An investor who sold equities purely on the week's headlines did not avoid a crisis. They paid the full cost of exiting a danger that, so far, has not materialised.
#2 A rocket company goes public, and the world gets its first trillionaire
Here’s the second story competing for attention: Elon Musk became the world’s first trillionaire after his company, SpaceX, went public, the biggest listing ever. The stock, which opened at $150, climbed past $160 and the company was worth more than $2 trillion by the end of the first day. Some investors even offered over $250 billion to buy in.
The number that matters here is not Musk's personal wealth. It is SpaceX's valuation relative to its business. At its offer valuation of about $1.78 trillion, SpaceX was priced at about 95 times its annual revenue. For comparison, Meta trades at about seven times sales today, and Amazon at around three and a half times. SpaceX earned about $18 billion in revenue last year, with its Starlink satellite-internet business doing most of the work. But it did not make a profit. The company lost $4.9 billion.
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This price, then, is not a judgment on what SpaceX earns today. It is a bet on what it might earn many years from now. For today's valuation to look reasonable a decade from now, roughly in line with the multiple Meta commands today, SpaceX would need annual revenue of about $250 billion. That is more than 13 times what it earned last year. The current revenue alone does not come close to justifying a price near $2 trillion.
Two stories, one lesson
There’s one thing in common between the US-Iran conflict and the SpaceX IPO: the market has already priced in news that hasn't happened yet.
The opening (or closing) of the Strait of Hormuz was the market pricing in bad news that had not fully arrived, and correcting itself once the immediate risk passed. SpaceX is the market pricing in good news that is yet to take place, and may take years to be proven. One forecast was tested within a week. The other will take a decade to test. Both are forecasts about the future, presented as though they were facts about the present.
The only way to avoid being misled by either is to ask one question whenever a price moves sharply: Is this telling me what has happened, or what someone thinks might happen?
Most investors skip this question. They see a price move and assume the move itself is meaningful information. It usually is not. A price reflects the market's current best guess about the future. Sometimes that guess is corrected within days, as with Hormuz.
Treating a guess as a settled fact is how careful investors end up reacting to short-term noise, or paying a steep price for a story that has not yet been proven.
What this means for you
The two events discussed here don’t mean you should completely ignore the news. This means you need to ask a sharper question: When something happens, will it change how much a company earns over the next five years? Or, has it only changed what people are guessing might happen the following month? Most headlines fall into the second category. Very few fall into the first.
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A well-run Indian company, a bank with a clean loan book, a consumer brand with genuine pricing power, does not become a weaker business because a shipping route on the other side of the world closes for 60 hours. Its real, long-term earning power barely changes when a guess gets revised twice in a single week. That gap, between what a stock's price is doing today and what the business is actually worth over the next 10 years, is where patient, long-term investors tend to build wealth, while short-term traders react to someone else's guess.
So, congratulations to Elon Musk. The achievement of building SpaceX is real. For one spectacular day, belief and price moved together.
The rest of us have a simpler task: learn to tell a guess from a fact and stop trading the guess.
Stop trading the guess. Start investing in the facts
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This article was originally published on June 26, 2026.
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