Before 30 June, investors across Australia start thinking about tax planning and portfolio reviews. One question comes up every year: when should you take profits?

It’s a difficult decision because selling a winner can feel like admitting the party is over. Yet after decades of investing, I’ve come to one simple conclusion:

It’s never been wrong to take a profit, even if it felt wrong at the time.

I’ve done it well, and I’ve done it poorly. But experience has taught me that locking in gains is one of the most underrated investing skills.

SpaceX IPO

With CommSec acting as the lead Australian retail broker for Australian investors wanting exposure to SpaceX, excitement is reaching fever pitch and it’s easy to understand why.

SpaceX isn’t just another company, it’s one of the most exciting businesses, with reusable rockets, satellite internet and artificial intelligence ambitions, investors see enormous potential.

But history teaches us that great businesses don’t always make great investments at every price.

What Does a Taco Chain Have to Do With Space?

More than you might think.

A useful comparison is the IPO of Guzman y Gomez (GYG).

The free float was relatively small—around 15%—creating significant pent-up demand. SpaceX is expected to have an even tighter free float of approximately 3–4%.

The result?

• Float price: $22
• First day gain: 36%
• Traded above $40 within six months

Investors couldn’t get enough.

But markets have a habit of cooling enthusiasm. The share price later fell as low as $15 before recovering above $18 after management announced it would scale back its US expansion plans.

The lesson isn’t that GYG is a bad company. The lesson is that hype and valuation are two different things.

We’ve Seen This Before

History is full of examples where taking profits into excitement proved the correct decision.

One of Australia’s most famous listings was AMP in 1998.

The stock famously traded as high as $45 on listing day before closing around $17.

It has never traded anywhere near those highs again.

For investors who sold into the enthusiasm, taking profits was clearly the right strategy.

The SpaceX Story Is Extraordinary

There is no denying the quality of many parts of the business.

Starlink

Starlink has built a satellite internet network with roughly 8,000 satellites in orbit, giving it an enormous competitive advantage.

Its scale is unmatched.

Falcon Rockets

Its Falcon launch vehicles continue to deploy dozens of satellites at a time, allowing SpaceX to maintain and expand its network efficiently.

Artificial Intelligence

Then there’s xAI and its growing AI infrastructure.

Large language models require enormous computing power, built on thousands of high-performance GPUs—the same Nvidia chips driving today’s AI revolution.

SpaceX is positioning itself within one of the world’s fastest-growing industries.

From an operational perspective, it’s an incredible business.

So What’s the Risk?

Valuation.

At approximately US$1.7 trillion, investors are paying an extraordinary price for future growth.

Markets can justify almost any valuation during periods of optimism.

But eventually earnings have to catch up.

When expectations become too high, even excellent operational performance may disappoint investors.

It’s a precarious investment case.

Index Funds Add Fuel to the Fire

Another factor supporting the share price in the short term is passive investing. Index funds don’t make valuation decisions.

When a company enters major indices, these funds are effectively forced buyers, creating additional demand regardless of price.

That buying pressure can push prices higher for a period of time.

But it doesn’t eliminate valuation risk.

Remember the Early Investors

It’s also worth remembering that many large investors already own SpaceX shares from private funding rounds completed at substantially lower valuations.

As opportunities arise, some may choose to realise gains.

That additional supply can eventually weigh on prices.

Every Investment Theme Reaches a Reckoning

We’ve seen it repeatedly.

• Lithium
• Gold
• Silver
• Uranium

Every major investment theme eventually reaches a point where expectations become excessive and reality catches up.

Today, some investors argue that Bitcoin may be approaching one of those moments as capital rotates into the next exciting opportunity.

The specific asset changes. Human psychology does not.

The Three Rules of Taking Profits

As 30 June approaches, remember these three simple principles:

1. You can’t go broke taking a profit

Banked gains are real gains.

2. You don’t have to sell everything

Consider taking some profits while allowing the remainder of your investment to continue participating if the story improves.

3. A calm mind is valuable

One of investing’s greatest benefits is peace of mind.

Sometimes taking profits helps you sleep better than chasing the last dollar of upside.

Final Thoughts

SpaceX may well perform strongly in the short term. Between enormous investor demand, Elon Musk’s reputation and compulsory buying from passive funds, there’s certainly a case for further gains.

But successful investing isn’t just about buying great companies.

It’s also about understanding valuation, managing risk and recognising when enthusiasm has become excessive.

Sometimes the smartest investment decision isn’t finding the next moon shot.

It’s knowing when to bring a little of that profit safely back to Earth.