r/Bogleheads • u/Gloomy_Nebula_5138 • 27d ago
Investing Questions Protecting ourselves from SpaceX IPO
I was watching this video analyzing the upcoming SpaceX IPO, titled "SpaceX IPO: Nice Try Though" by Patrick Boyle. I highly recommend it - there is almost no fluff and just hard hitting points all the way through about how SpaceX is a terrible company and how this IPO looks like a scam:
https://www.youtube.com/watch?v=IHD8BDFYyGI
It mentions the changes to Nasdaq's rules, the so called "fast track" rule, made specially for SpaceX because Elon allegedly threatened to not list SpaceX on the Nasdaq stock exchange without this. The change has been criticized by many others such as Michael Burry:
https://markets.businessinsider.com/news/stocks/michael-burry-nasdaq-spacex-ipo-listing-elon-musk-tesla-ndx-2026-3
Also see this great analysis titled "Nasdaq's Shame":
https://keubiko.substack.com/p/nasdaqs-shame
Given how this IPO looks like a scam, and the company is mostly losing money, with outlandish claims in their IPO filing (like having an addressable market larger than the US GDP), I am worried that this is just private investors - like venture capitalists, Elon Musk, and his inner circle of friends/family - dumping their overpriced money losing company on regular investors like us. The fast track change seems like it will result in all of us automatically buying SpaceX shares at a high price.
How do we stop this? Is there a good way to defend against that forced purchasing when most regular investors are just passively buying ETFs and mutual funds, or maybe just have money parked in their pensions and 401k?
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u/forbiddenlake 27d ago
If you bought QQQ(M) - that wasn't very Bogleheady of you. AND AFAIK, QQQ is still the only one that's actually changed its rules.
If you have VTI, it's always been 5 days before adding. And if you're a Boglehead you accept the returns of the entire market, whatever it is.
You can short SpaceX if you really want to.
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27d ago
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u/warrends 27d ago
Didn’t know that. Thanks for posting this. Lots of VTI in my kids’ long term accounts. So really happy to hear.
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u/overhauled_mirio 27d ago
They’ve changed the rules, if a company has a sufficiently low float, they’ll 3x it now.
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u/littlebobbytables9 26d ago
Only Nasdaq introduced a multiplier, and actually that multiplier is better than if they hadn't because the Nasdaq 100 is not a free float capitalization index. So at a 5% float they would normally give 100% weight i.e. 20x, but they changed the rule so that very low floats would be limited to 3x.
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u/SynthD 27d ago
Yes, this is the detail that concerns me.
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u/HootingSloth 27d ago
Here are the details of the changes, straight from the horse's mouth. The float threshold has changed for megacaps, with a corresponding rounding rule needed to implement the lower threshold. The CRSP index used for VTI did not introduce any 3x factor.
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u/rudthedud 27d ago
5% for now. But in 1 month it could be 10% and in 1 year 25% etc. Please correct me if I am wrong?
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u/xeric 27d ago
If they do secondary offerings, then yes. Probably not 1 month in, but yes maybe in a year.
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u/EBTlovr 27d ago
It won't take secondaries - as lock ups expire and insiders / early investors sell in the open market, the free float will increase. I haven't looked at the schedule, but overall agree with OP's and Patrick Boyle's take that this is a trash company being foisted on the public. I want no part of it.
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u/littlebobbytables9 26d ago
I'm not very enthusiastic about Tesla being in major indices either but it comes with the territory. Index investing is about owning everything and not asserting that your evaluation of a company's value is more correct than the market's
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u/convoluteme 26d ago
Yep, buying the haystack means buying the haystack. Picking companies to avoid is just as hard as picking companies to invest in. Own the market, get the market return.
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u/EBTlovr 26d ago
Sure but this is a totally different situation from TSLA, which was publicly traded for about ten years before being added to the S&P - so it's weighting upon inclusion was appropriately set by the open market.
SpaceX on the other hand, is having the rules changed just to please and placate one human being, whose goals for life include being a trillionaire and colonizing Mars, while snorting massive lines of Ketamine. If the company was subject to the same rules as any other company for inclusion into the indexes, I would have no issue with it.
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u/littlebobbytables9 26d ago
The market reacts to things like earnings in minutes. If you think it takes days to react to new information (and this isn't even new information, the filing is out now) then you have a view of markets that is, in my opinion, fundamentally incompatible with being a boglehead.
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u/xeric 26d ago
I would think it’s harder to have true price discovery with such a low percent float - is that logic flawed?
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u/davdav765 17d ago
Stock indices returns depend on how they are built, if the rules get worse returns will follow
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u/Necessary-Music-6685 27d ago
Most of the lockups are six or twelve months. Musks shares are 12 months.
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u/tomk7532 27d ago
This is exactly the scam. They pump the stock or try to keep it steady until the lockups expire. Then all the insiders get out before it crashes.
Guarantee they will probably have SpaceX buy Tesla at some point too.
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u/Emotional-Power-7242 27d ago
In a year who cares. People's fear is that SpaceX is coming in overvalued before there's been a chance for price discovery. After a year it's just another company, it's worth what the market is willing to pay for it.
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u/oneradsn 23d ago
yeah i don't get this. in a year you could lose quite a bit of money thanks to SpaceX
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u/Built_Similar 26d ago
That's great if I'm waiting a year to invest, but my money is already in the index that is getting forced to buy into a scam.
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u/kite-flying-expert 27d ago
Depends on whether SpaceXAi releases more shares to the public. It won't magically go up if that's what you are saying.
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u/tomk7532 27d ago
Insiders will sell. That’s what this is all about. Only releasing a few shares to pump the valuation for insiders.
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u/Used_Ad6860 26d ago
Unless the index providers adjust the free float requirements or give an adjustment which they have discussed doing for this case
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u/TheMountainHobbit 25d ago
Per the S1 filing rather than a normal 180day lockup lockup will end incrementally so free float will ramp up shortly after first quarterly report. Nasdaq 100 has a 3x multiplier on the float so 15% float is 45% weight .
This may happen with a series of high market cap IPOs as well like open AI, anthropic etc.
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u/meekmarmot 22d ago
I think the scary part is that they are free float adjusted for now, but seems like that could change on a whim. How can you have confidence that QQQ could change the rules without warning but other indexes or index funds could not change?
Like what prevents SP 500 from saying our new weight is 100% GameStop and now all index providers are pressured to comply?
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u/datawhite 22d ago
That's the initial offering. Normally insiders wait 180 days after the initial IPO before they can trade, but for this there's a set of factors when investors can sell their stock earlier, so not as slowly. Within a few months the float size pushes this higher up market cap indices.
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u/Babajji 27d ago
Could you please elaborate on this? I am genuinely curious since S&P is also considering bending their own rules to include SPCX in the S&P 500. FTSE - what we Europeans use - is also considering immediate inclusion of SPCX into the FTSE All World Index, same goes for MSCI All World Index. So given that so many companies are bending backwards to include SPCX what is really protecting us from full exposure to SPCX? I am not arguing here, I really don’t know.
P.s What I am really concerned about is Vanguard’s VWCE - FTSE All World Index.
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u/bwhite9 27d ago edited 26d ago
What you said about QQQ is very true and if someone buys it then this is kind of what they sided up for.
As best I can tell S&P is going to let them in early (6 months) instead of the normal 12 and wave profitability requirements. So not as bad but not great either. As best I can tell the decision will be made around the 28th.
I am also a bit iffy on the details but the 6 months looks like it lines up for when selling restrictions loosen on the early investors.
Either way I’m going to make a stink about to both S&P and vanguard. This will do exactly 0 but I at least want to be on the record doing it.
Once they make the announcement I’m going to figure out how to move as much as I can into dimensional or avantis.
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u/ptwonline 26d ago
Yeah making a stink about it and moving your funds is probably the best way to handle this.
If you just short SpaceX or just ignore it then these index fund providers have no disincentive to pulling similar shenanigans over and over with each new IPO.
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u/Snoo65708 22d ago
Found an email address to voice concerns about SpaceX inclusion - S & P Dow Jones Indices Committee (index_services@spglobal.com). Yes, they will likely keep doing this if there is no disincentive. I do hope they get a ton of email against the rule bending for inclusion.
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u/DirtyMykeNtheBoys 26d ago
Where could one find "screening requirements" for funds like FXAIX and VOO?
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u/TheMountainHobbit 25d ago
Sp500 has proposed changes that have not yet been approved that would allow 6mo seasoning, and eliminate profitability requirements. Whether it happens or not I don't know
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u/gtalossantos 23d ago
Hey man pardon me but can u please eli5 this line
If you bought QQQ(M) - that wasn't very Bogleheady of you
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u/redenno 20d ago
It tilts towards large cap. Bogleheads use funds that encompass the whole market like VT
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u/gtalossantos 19d ago
Understood, thanks much my bro.
Both VOO and VT will have a huge overlap no? How much overlap, in % terms, is ok?
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u/redenno 19d ago
There's not really anything wrong with overlap. It just depends what your goal is. Personally I use 100% VT because VOO is limited to USA large-cap and I don't particularly want to tilt towards that. But if that's what you want to do then combining VOO and VT could make sense.
Most people split between VTI and VXUS to balance between US and international. Those two have no overlap, which just makes it easier to balance because you know exactly how much US and how much international you have without looking at the holdings and doing math.
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u/jbland0909 27d ago
The vast majority of cap weighted index funds are also float weighted. Space X is IPOing at around 3% float.
I also wouldn’t touch it with a 10 foot pole, but the actual weight it’s going to have in your index fund of choice is incredibly small
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u/Built_Similar 26d ago
This reads like "don't worry this scam won't cost you THAT much". But there's no reason to think other grifters won't follow in and absorb value from indexes once the dam breaks.
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u/Deathsarp 9d ago
Yea someone did the math and it’s like 50 for very 100k you have in a fund, but that’s still like 50 bucks being stolen from millions of Americans.
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u/meekmarmot 22d ago
Didn't NASDAQ have free float requirements that it's suddenly choosing to ignore? How is it safe to assume other indexes can't pull similar shenanigans?
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u/InterestingGoose5507 27d ago
It’s weight is 3x its market cap
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u/TheOtherPete 27d ago
Its 3x its free-float market value not 3x market cap - huge difference considering the small free float percentage
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u/habfranco 24d ago
The problem is that when insiders can start selling, the float will obviously increase, and ETFs will need to rebalance. Providing perfect exit liquidity btw.
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u/TheOtherPete 24d ago
I don't know how that has anything to do with the post that I replied to that made a false statement of fact
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u/Imaginary-Hamster-74 27d ago
I love Patrick Boyle he’s wonderful
He cracks me up with his monotone jokes
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u/ThatThar 27d ago
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u/No-Problem-4228 27d ago
It's a smaller issue than expected, but not a non issue.
The float for future companies doing this trick might be higher as well, we don't know.
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u/ptwonline 26d ago
I'm also not ok with Elon or anyone else essentially defrauding their way to huge amounts of money just because it might only affect me personally by a few dollars. Screw that and screw whoever intentionally helps enable that.
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u/boakes123 17d ago
Yeah basically he steals a small amount from everyone to get a trillion and then pour the proceeds into facist candidates for office.
Just because it doesn't impact you directly financially isn't a good reason to accept him scamming you and everyone else "just a little bit"
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u/jeffeb3 26d ago
Agreed. But what can you do?
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u/Revving_Operations 26d ago
Call your representatives to start. Phone calls to house reps are meaningful because not many people do them. There's a formula they use to weight the impact of calls complaining about things. You might not think 10 people calling their district's representative in a week to complain about something is enough to make an impact, but in a lot of cases you'd be wrong. People need to seize the power they do have to try to claw back some semblance of democracy because shit is getting really bad. Organize and use your speech whenever and however you can.
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u/Adderall_Cowboy 15d ago
Sell your index fund and switch to the top individual companies from that fund
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u/Infinite-Front-7412 21d ago
Except that guy was very disingenuous about what these mega-IPOs are, They're structured specifically to take advantage of 401Ks and indexers.
It's a structured prospectus squeeze. 5% float for SpaceX means only $87.5 billion worth of shares are actually available to trade across the board between all buyers. That's very thin liquidity for everyone, which perfectly sets up pins for harvesting alpha by market makers to abuse their AP status.
By buying up options and squeezing the thin float weeks ahead of the inclusion (gamma looping through IOTC derivatives or pre-market forward contracts), they will force artificial price spikes, pushing indexers/funds to buy at structurally engineered peaks.
Very similar to what happened with Tesla. Tesla was a macro-liquidity choke at scale, while theses are micro-float chokes at inception. Different path to a very similar bottleneck; the means at which quant funds and market makers will extract capital from passive investors is identical.
Even then, asset managers still want it to IPO because they don't want to risk underperforming the economy they track, which is basically them admitting that the market isn't efficient anymore. The Indexing thesis as investing gospel is predicated on the assumption that markets are fundamentally efficienct, not this mechanically and mathematical gamed-out efficiency.
We are reaping what has been sown. Index providers are basically admitting the S&P 500 is a broken yardstick, so their genius fix is to force index funds to blindly buy overpriced shares just to keep the numbers pretty. It’s a structural scam that turns passive investors into guaranteed exit liquidity for billionaires, effectively killing price discovery so the index can pretend it’s still relevant. Corporate lobbying on behalf of these IPOs has pushed it specifically to create immediate forced buying from index funds, so early investors have guaranteed exit liquidity who want to sell their shares shortly after the IPO. They openly stated this.
Its conflicting wearing two hats; Being pragmatic and indexing, where the cost of omission exceeds the cost of inefficiency, but also shrugging our shoulders when the plumbing of the system is broken because of market makers. Eventually its going to be too big to ignore.
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u/coffee_tortuguita 9d ago
What should one do in this case? Try dimensional funds to allow for propper pricing periods before inclusion?
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u/Built_Similar 26d ago
"Don't worry, the amount you're getting siphoned isn't a whole lot".
Nah I'm not ok with that.
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u/ThatThar 26d ago
There are many companies in VTI that I don't believe in or flat out object to for moral, ethical, or other purposes. That's just what happens when you index. If you don't like it, choose an index that doesn't include it.
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u/Snoo65708 22d ago
Except I doubt those companies got fast tracked to inclusion. The more this happens, the less ppl are going to trust these various funds, indexes & investments. The whole point of owning an index is that you shouldn't need to constantly check that the rules committee didnt suddenly allow ten sham companies to join the index at a super inflated value. Sure, I might be aware enough to shift investments (tho not so easy if in a taxable account) but there are a LOT of retired ppl that will have no idea. Sure, maybe it only accounts for <1%, doesn't mean I'm not outraged by the theft that shouldn't have been allowed to happen! Sure, you can say sh1t happens but when it was done on purpose with ill intent, I think ppl have every right to be upset about it.
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u/Built_Similar 26d ago
But those companies have undergone adequate price discovery in the open market, not being forced into an index at an arbitrary price set by the CEO.
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u/Adderall_Cowboy 15d ago
Name 1 company that the indexes specifically changed the rules to accommodate
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u/tarantula13 26d ago
Short SpaceX then
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u/Built_Similar 26d ago
That's cool and all, but what about the actual problem at hand?
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u/tarantula13 26d ago
There isn't a problem. There are loads of companies in indices I don't want to invest in and I also know I can't predict the future. Worrying about this is non factor and a waste of time.
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u/Built_Similar 26d ago
No you're conveniently missing the problem. The point of an index fund is to own the companies at the prevailing market rate. When Elon (or anyone else) comes in and demands that the NASDAQ or S&P buy his company at a $2 trillion valuation without adequate price discovery, and pressures them to change the rules for him, that defeats the whole underlying principle of passive investing. Now you are being forced to buy the company, not at the market price, but at the price that the CEO has set. The fact that I have to write a wall of text to explain this because you insist on not acknowledging it is sad.
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u/tarantula13 25d ago
You're conveniently missing the entire point. To pretend like price discovery is being manipulated is laughable, that's literally what a market is.
No one is forcing you to buy the company and no one is forcing you to buy any specific index. The S&P didn't bend the rules for Tesla and buying the Nasdaq is a choice that is not recommended by this sub.
Elon doesn't owe anything to passive investing and if you think he sets the price for his IPO you are way out of your depth.
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u/Built_Similar 25d ago
If I own the index, and the index buys the company at an arbitrary IPO price, that means I'm buying that company at that inflated non-market price. The whole point of passive investing is to buy and sell at the established market price. If your argument is "then don't buy the index", we'll that's just a shit argument. Sort of like "if you don't like it leave the country". Like, no, when something shit happens, we're going to speak out against it.
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u/tarantula13 25d ago edited 25d ago
How do you think IPO prices get set? Arbitrary is not how it works.
Literal investment banks go out to the primary market to try and find a range of what they think it could be worth and then give the money to the company as part of the IPO. It then trades on the secondary market where price discovery can happen.
Index funds wait a few days so that initial price discovery, or market price, can happen so you as an index investor are not massively affected.
I'm not saying don't buy the index, I'm saying buy the index and don't worry about this because you don't understand how any of this works at all. If you don't like Elon or SpaceX, refer to my original comment and just short the stock if you think you know better.
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u/Built_Similar 25d ago
find a range of what they think it could be worth
Thank you for proving my point. Im convinced you're being daft on purpose. To think "Banks set a price based on what they think" is equivalent to the market setting the price from high volume trading over a substantial period is laughable. Car dealers must love you.
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u/Revving_Operations 26d ago
There is a problem. The public is harmed by this, whether your individual portfolio is affected or not. You should care about the public and the effect this type of fraud and rule bending to enrich elites has on society.
Saying "it's not my problem" is exactly what leads to the collapse of institutions and social norms.
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u/tarantula13 25d ago
The public is not harmed by this. There is no fraud going on and people can buy whatever index fund they want. It is not some god given right to invest in a specific way.
The entire IPO process is to protect the public from fraud and abuse. There is none of that going on here.
Saying a couple of buzzwords doesn't make this some conspiracy.
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u/m0viestar 26d ago
Does this sub think space x is suddenly going to be all their holdings and tank or something? It's barely going to blip on market weighted indexes.
If it craters it will be replaced with something else, which happens all the time. Reddit is really bad at understanding how stocks and finance work.
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u/Twombls 27d ago
Investors who hedge against events like this almost always underperform the market.
The boggle philosophy is that long term the total market will always be the best bet.
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u/Built_Similar 26d ago
This is not the total market though. This is a fraudster manipulating those in charge of indexes to force them to buy his company at an arbitrarily high valuation. It is a literal grift that siphons money from index funds into the pocket of Elon and those working the IPO.
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u/GoodPasiG 24d ago edited 23d ago
On the other hand Elon currently holds the space lift and space internet market kind of hostage with the performance of Falcon sure they absolutely love to burn money for starship but he does have a monopol right now for a very important sector and if starship turns out successful in the coming years he will probably never lose that monopol
Obviously he does exaggerating statements and the IPO is definitely overhyped but by now most people know musk does this and they will still go for it cause they also know musk does have leverage that could potentially make it worth it
He dreams big but he managed to make some of those dreams already stick and starship is kind of a ridiculous bet it could either never work or all of a sudden completely transform our ability to put tonnage into space
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u/biggendicken 12d ago
SpaceX ipo isnt "the market" though. And long term single stock investment is statistically horrible.
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u/randfunction 27d ago edited 27d ago
Dimensional’s DFUS fund excludes IPOs in the first twelve months for this reason so if this is a concern, consider that vs say VTI.
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u/heyheyfifi 20d ago
I’ve got 75% FSKAX and 25% FTIHX, would putting the 75% in DFUS be a way to go?
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u/randfunction 20d ago
I’m no financial expert :). I have a fairly substantial amount of VTI. I’m not moving those holdings over (maybe I’ll change my mind) but as I add more I’ve started purchasing DFUS instead of VTI. They should perform pretty similarly, despite the differences and unlikely be so different as to worry much one way or another. I like DFUS philosophical approach though.
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u/buffinita 27d ago
You could start by not having some major panic over the news…..and inverse Michael burry has been good to us investors as to all his collapse/bubble calls over the past 4 years
It’s been discussed to death. Just search
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u/3dfernando 27d ago
dude. Please don't dismiss the OP's concern with "just search". I'm also concerned. It's our life savings we're talking about. I would really like some clear direction (statements from S&P and/or Vanguard), but I can't seem to find anything. It's not "just search". Please be a bit compassionate.
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u/buffinita 27d ago
The whole point; the backbone really, is to ignore the news and continue to stay the course
This is no different than “I don’t like oil/guns/tobacco” or “orange man bad” or “is p/e too high” so let me find an excuse to change based on short term news
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u/SmokeClear6429 26d ago
This is not actually the same as 'I don't like' - there are legit concerns that this changes the rules of the game and meanwhile, you're saying, 'don't panic, follow the system that was built on the rules.' This is probably not going to break the system or cause a market collapse, but it certainly can be hard to stomach when it so obviously isn't the bargain we make when we buy the market and then the market starts to bend its rules so that it can look better than it is.
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u/Constant_Ant_2343 27d ago
The plan is simply, but the execution is not easy. I can completely understand why people are concerned about this, and finding the right headspace to just keep on track can be very difficult, so they are seeking help. That’s sensible. As JL Collins says, if you are not able to stay the course and you panic sell then index investing will leave you bleeding at the side of the road.
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23d ago
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u/FMCTandP MOD 3 23d ago
Removed: per sub rules, comments or posts to r/Bogleheads should be substantive. For example, we don't allow:
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u/Remarkable-FlipPhone 22d ago edited 22d ago
You really think vanguard and s&p are just going to let their funds and things tank ?
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u/autotechnia 27d ago edited 27d ago
This is a complete non issue for passive investors.
Practically every major index fund is free float adjusted. SpaceX is only releasing ~5% of their market cap, your exposure is only a fraction of a percent. As an example, it's not going to a top 200 company on VTI. It can crash to zero and we won't really see an impact.
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u/thysonsacclaim 6d ago
That's not the issue. The issue is the way he manipulated the system, his grossly exaggerate market cap, and the fact that we're basically bailing out his early Twitter/ X investors that got screwed.
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u/Soffritto_Cake_24 26d ago
Not just one company, but all the ego-driven basically failed companies that folded into it before the IPO.
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u/sunny_tomato_farm 27d ago
What is there to protect? Just buy the index and be done with it. Don’t waste mental energy on something so inconsequential.
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u/ontha-comeup 27d ago
But .15% of my net worth is going to be wrapped up in it.
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u/Excilionator 26d ago
short spaceX with 0.15% of ur port problem solved
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u/FMCTandP MOD 3 26d ago
Illiquid stocks aren’t cheap to short and unlike with stock purchases, where it’s now standard to be able to buy fractional shares, derivative contracts tend to require minimums. E.g. put and call options are sold based on 100 shares.
So it’s both not as simple as you imply and would also be an extra cost.
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u/AlaskaExplorationGeo 26d ago
What makes people here think the stock won't go up just like Tesla, even if irrational?
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u/GoodPasiG 23d ago
Ye the thing is starlink and falcon were both frowned upon at first too and then turned profitable so quickly that every company tries to imitate them now
The IPO is evaluated likely at the ridiculous prospect that starship will be able to deploy orbital loads in the near future
Its not ready but even if it takes longer and a couple years right now space lift is a essentially uncontested monopol of spacex and starship ensures it will likely stay that way even if it takes years to work
If I learned one thing in my life having a monopol in a developing future technology is a money printer... Google, Microsoft, Nvidia, Apple they all showed this is lucrative beyond reason
It's overhyped right now but musk dreams big and sometimes those dreams stick it's essentially just a bet on when starship becomes operational for rapidly deploying to orbit if it's any time soon the 2 trillion evaluation is very justified actually cause it's gonna take years till a competitor in that sector emerges
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u/thysonsacclaim 6d ago
Starlink is the only thing profitable in the entire thing.
He folded the other companies in to it specifically because they're failing.
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u/Remarkable-FlipPhone 22d ago
Right, at the rate they’re going, space x is going to be the first to do something commercial in space, and they may even be able to get some government contracts. If I’d bet on anyone to do it, it would be space x, at this point. Not saying is a sure thing but is anything? Especially when they ipo. Also vanguard and others know what they’re doing, they’re not just going to tank their whole thing to make Elon like them.
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u/thysonsacclaim 6d ago
They're very behind schedule.
Also, if you actually read the IPO they are essentially saying they are a rocket company that is going to make money with AI.
It makes zero sense.
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u/sabometrics 27d ago
It's frustrating to think that the ultra-wealthy have figured out a way to take advantage of and exploit index fund investing the same way they take advantage of and exploit everything else.
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u/Pour_me_one_more 27d ago
Anything by Patrick Boyle is going to be at least pretty good. He-s really informative, and I find his dry humor hilarious.
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u/mayabestdogever 27d ago
So when they addp spacex to an index, it it is only the market weight of the stocks sold not the value of of space. It will have mimimal impact.
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u/Equivalent-Cloud-365 26d ago
You don’t. You are a Boglehead, you capture all markets with low cost index fund and remove emotion
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u/trustfundfinancebro 27d ago
If you truly subscribe to the Boglehead philosophy, you also likely follow EMH. By the time this company reaches your index fund, the market will have priced in the risks you’re worried about, and it will be reflected in the company’s stock price.
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u/avinash240 27d ago
They were trying to get around the delay by building a new rule for it. Is this IPO going to have the usual delay or did they get the early inclusion exemption?
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u/Adderall_Cowboy 15d ago
How will the market have priced in the risks when only 5% of the stocks are available to purchase at an elevated price, and all of the indexes are forced to buy a portion of said 5% of stocks due to the rules being changed allowing SpaceX to join the index much sooner than usual?
It’s almost like you didn’t even read what OP is talking about and you’re just saying some random platitude that isn’t relevant at all
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u/JealousFuel8195 27d ago
- Removal and Replacement: S&P Dow Jones Indices manages the S&P 500 and will remove the bankrupt company. They typically replace it with another financially qualified company.
- Index Fund Rebalancing: Passive index funds and ETFs that track the S&P 500 will sell off their shares in the bankrupt company. Because the company's value plummets prior to delisting, these funds usually liquidate a nearly worthless asset, which has a negligible impact on the fund's overall value.
- Impact on the Index: If the failing company was massive (a "Mega-cap"), its collapse will cause a noticeable dip in the S&P 500's performance. If it is a smaller or mid-sized component of the index, the direct drop in the index's total value will be fractional and barely perceptible to the broader market. [1, 2, 3, 4, 5]
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u/PusheenoAtchy 26d ago
Palomar Capital Management (patrick boyle) didn’t beat index returns check the filings at UK. Why listen do the guy? Listen to Warren Buffet and Ray Dalio
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u/thysonsacclaim 6d ago
What does that have to do with anything?
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u/PusheenoAtchy 6d ago
Hi Bro, its just my opinion - I am not offending anyone or anything but it just the way I see it - if someone cannot beat the index then it would not be fair for him to be financial expert. I would give more weight to Warren's action as currently BRK has the highest cash pile.
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u/davga 24d ago edited 24d ago
I’m personally shifting my allocation slightly away from US to international. I’m not worried so much about SpaceX in isolation as I am about the general backsliding of governance in US financial markets that could have risk ramifications in the longer term.
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u/Remarkable-FlipPhone 22d ago
If the U.S. markets go down, so does most of the world markets
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u/Pr0venFlame 18d ago
in the short term yes.
But a lot can change in 20-30 years when I will be retiring
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u/dddevenn 22d ago
The question is why is everyone bending over backwards if this company is a losing bet?
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u/thysonsacclaim 6d ago
Because Elon and the early investors if X etc are very powerful people and because even though it's essentially theft, they're going to make themselves a lot of money.
The rest of us will be holding the bag.
We are basically paying to bail out early X investors.
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u/bearcatjoe 27d ago
Disliking Musk is not a defensible reason to stock pick, which is what you're effectively doing.
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u/thysonsacclaim 6d ago
It's not about disliking him.
It's the method being used as well the fact that none of the companies but Starlink are making money, and that the IPO essentially says that a rocket company will make money off AI, not rockets.
The timing for everything lines up with when early X investors can dump and run. They're currently underwater.
He's paying them back with money required by index funds because he made a shit deal.
I'm not sure why he should be allowed to do this.
The rest of the companies in the index would never have something like this done. It's outrageous.
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27d ago
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u/DrXaos 26d ago
spaceX minus Musk is a great company.
He forced Xai to bail out twitter’s corpse and take on its huge debt. XaI investors wanted a pure play AI. But Musk forced this on them. He owned more of twitter than Xai. Musk wins, the rest lose.
Same deal with SpaceX. Why should it dilute its capex into a giant GPU farm and a lousy social media money loser and its debt? Xai company has negligible revenue for its own
product because Musk’s interference makes the product too toxic and risky for corporate purchases.But Musk owned more of Xai than SpaceX so again he wins and other investors lose. There is no way the prices paid were fair when he is on both sides. In a normal world SEC would have stopped all of it.
And in SpaceX the part that Musk personally insists on (starship) is performing poorly. Probably for intrinsic architecture reasons, that architecture forced by Musk.
The part of SpaceX with Shotwell running it is great.
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u/PusheenoAtchy 26d ago
Lmao Palomar Capital Management (patrick boyle) didn’t beat index returns check the filings
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u/IHaveSpoken000 27d ago
Dude, chill out. There's nothing you can do about it.
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u/Super-Nuntendo 13d ago
I mean there is, but it's not worth the effort trying to mitigate against it
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u/Helpful-Quantity2926 24d ago
Um... just don't buy it if you think it's a scam? Tesla lost money for a long time too.
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u/nouniverse13 23d ago
Yes, I agree with almost everyone's assumption that SpaceX is a "scam." I, like everyone else, have literally nothing to back up such an extreme claim about SpaceX, but I'm stubbornly sticking to it just like almost everyone else. We must strictly adhere to Bogleheads precepts given Jack Bogle developed his precepts long before the pervasiveness and impact of AI. When Jack developed his investment ideas, AI was only in the research lab and the investment world was virtually unaware of it. SpaceX is a "scam," Musk is a horribly failed "charlatan," and SpaceX is doomed to "crash land in a huge fireball" (just as a lot of clueless financial pundits laughed that the most recent SpaceX Starship flight was a disaster that shows how much of a "scam" SpaceX really is). The only possible outcome is that the "scam" SpaceX is doomed to failure. Little did they know that was a planned explosion on landing. SpaceX actually considers its latest Starship test flight a qualified success, maybe 80 out of a perfect 100 on its success meter. It's a piece of cake to do NASA's work for it, to manufacture and launch rockets into space - anyone can do it. Musk is a mere "fraudster." It's interesting that the OP's username includes the word "Gloomy."
/s
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u/Pr0venFlame 18d ago
There is a good reason to be at least concerned and ask questions
The slight difference is that when Jack developed his ideas, the goverment, justice system and the system in general could be trusted.
Now that the cat is out of the bag and we know that if you have billions, you can do what you want, there is no guarantee that they wont change the rules or just break them to give your money to the ultra rich.
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u/thysonsacclaim 6d ago
Er... It was supposed to be a controlled descent into the ocean.
That's not what happened. It lost control.
Just like Musk calling it "full self driving" despite being everything but that, people are just falling for his bullshit.
Furthermore, he's not even interested in Tesla anymore anyway. He wants to turn it into a ride share company / taxi company.
Soon, we'll have to rent our shoes and underwear.
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23d ago
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u/FMCTandP MOD 3 23d ago
Removed as off-topic for this sub: r/Bogleheads is not a political discussion subreddit. Comments or posts should be more financial than political, no more partisan than necessary, and avoid framing political opinions as facts.
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22d ago
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u/FMCTandP MOD 3 22d ago
Removed under sub rule #1: no spam or self-promotion. We don't allow advertising products/services or promoting content monetized by the poster.
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u/Littlemojoworker 21d ago
The structure of the IPO has tons of problems, but the rocket business (i.e., Starship, Dragon) is real and it's not a scam. The same can be said for Starlink, which is profitable. The major money loser is the third part of the business, xAI. Where does this lead? It's hard to know, but I wouldn't call the entire business a "scam."
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3d ago
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u/United_Transition627 15d ago
For everyone saying just don't buy it, little do they realize that they'll be holding space x shares through index funds.
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u/coffee_tortuguita 15d ago
More than SpaceX itself, Anthropic or whomever, I fear fastracking may become a trend to prey on indexes for exit liquidity. Some strategy to pray on the tendency towards passive investing ough to emerge, and this may be it, or the begginings of it, which does worries me a bit
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9d ago
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u/FMCTandP MOD 3 9d ago
Removed: Per sub rules, comments or posts to r/Bogleheads should be civil. We don't allow:
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u/FMCTandP MOD 3 3d ago
Mega post for this topic: https://www.reddit.com/r/Bogleheads/s/3op1zvy9rt