| ▲ | noir_lord 3 hours ago |
| > Truly a brilliant deal for everyone involved. Except for people who have pensions/investments in whole market class investments who become exposed to an over valued company with a propped up value. |
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| ▲ | benl 3 hours ago | parent | next [-] |
| If whole market means whole market, then such investments are exposed to companies who are fairly valued, companies who are massively overvalued, and companies who are massively undervalued, and the whole range in between. If you want to start picking and choosing which companies are overvalued and which are undervalued, don’t invest in whole market funds. But most people are not good at that! |
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| ▲ | u1hcw9nx an hour ago | parent | next [-] | | the problem: The Nasdaq 100 and FTSE Russell made a rule change that allows SpaceX to enter index without mormal time for price discovery. Most index funds have rebalance day just 5 days after IPO. S&P also made rule change for S&P Total Market Index and Dow Jones US Total Stock Market Index, but left SP500 intact. Nothing wrong with SpaceX or Anthropic getting into indexes with fair rules, this rule change is pure creed+corruption. | | |
| ▲ | benl an hour ago | parent [-] | | Those funds are not whole market funds. But there are things to say about your point too. I’ve commented on that in other threads. |
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| ▲ | nativeit an hour ago | parent | prev | next [-] | | Are there really 10-100x undervalued companies listed on indexes that haven’t been noticed? | |
| ▲ | nibbleyou 2 hours ago | parent | prev | next [-] | | I don't understand this logic. Does whole market mean scamming companies too? | | |
| ▲ | tony69 2 hours ago | parent | next [-] | | Yes. That’s what passive investing is. You give money to the passive fund, the passive fund buys the market. No regard to price or any other metric. | |
| ▲ | matwood an hour ago | parent | prev [-] | | Fun fact, both Enron and Lehman Brothers were in the S&P 500 when they went bankrupt. So yes, the whole market or even the market of the largest companies, includes some that may not be great companies. The beauty of the index is you don't have to know or care, since it'll take care of itself over time. | | |
| ▲ | derektank 4 minutes ago | parent [-] | | >The beauty of the index is you don't have to know or care, since it'll take care of itself over time As long as there are active investors in the market conducting price discovery. Which there always will be, just pointing out that someone has to care, even if you don’t |
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| ▲ | ericd 3 hours ago | parent | prev [-] | | Also, there’s a long history of companies that people yell about being overvalued being the drivers of index returns, because one of the major drivers is growth rate, whereas retail investors tend to look mostly at current state. |
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| ▲ | bko 38 minutes ago | parent | prev | next [-] |
| So your contention is what? This will crash? Surely you'll be shorting the stock right? |
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| ▲ | matthewdgreen 29 minutes ago | parent [-] | | A company can have poor fundamentals compared to its stock price, and also have an enormous P/E multiple if it has committed investors. We've seen this with multiple meme stocks and Tesla. I have no doubt SpaceX will fly high for a while and people will make a lot of money, but I don't think the company is going to make $320bn/year in AI services (with 74% profit) by 2030 as the S-1 suggests. At some point the market price will coincide with real earnings. |
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| ▲ | 3 hours ago | parent | prev | next [-] |
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| ▲ | rdiddly 3 hours ago | parent | prev | next [-] |
| The key there is "whole market." This is still a tiny sliver of the whole market and most people's exposure to it is minimal. Still a wealth extraction move ultimately, but like many other such moves, the few pull just a little from each of the many. Nobody individually goes broke, but the whole class gets slightly poorer. It takes a village to raise a billionaire! |
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| ▲ | deadbabe 2 hours ago | parent | prev [-] |
| If you want to play “active investor” and pick and choose what companies you invest in, don’t be surprised when you underperform the whole market. SpaceX could rise to be a major winner that makes people a lot of money. And then what? You missed out and underperform the whole market. |
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| ▲ | pqtyw 25 minutes ago | parent | next [-] | | > SpaceX could rise to be a major winner that makes people a lot of money Based on "sane"/traditional metrics that and much more is already priced in into the IPO valuation. e.g. Google had a many times lower P/S ratio at their IPO and was actually profitable (and software companies usually have higher valuations than capital intensive ones like SpaceX anyway). SpaceX is already valued at more than Google was 10 years after its IPO while barely making a tiny fraction of its revenue. | |
| ▲ | amoss 2 hours ago | parent | prev | next [-] | | Alternatively you may want to be a passive investor using the current rules for index inclusion, rather than having them altered to favor this loss-making trashcan on fire. | |
| ▲ | nrclark 2 hours ago | parent | prev [-] | | OK, but SpaceX is not printing money out of thin air. And neither does the stock market. Somebody will be left holding the bag eventually. | | |
| ▲ | tasuki 41 minutes ago | parent [-] | | > Somebody will be left holding the bag eventually. I think so too. I also thought that about Facebook: IPO around 40, swiftly down to 20 - I was laughing about stupid retail getting wrecked. Now it's around 600... | | |
| ▲ | pqtyw 21 minutes ago | parent [-] | | Maybe you are right, maybe not.. However Facebook as an example seems entirely irrelevant, though? It was valued 15 P/S ratio at IPO and went down to 10 a year after the IPO. You'd have a point if Facebook IPO at $400 instead of $40. But it took it 10 years to reach that. SpaceX IPO price already has many years of extremely high growth priced in. Comparing it to Facebook's or Google's IPOs is like apples to oranges. |
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