1. Twitter is purchased with debt
2. Debt is transferred to xAI via acquisition of X/Twitter
3. Debt is further transferred to SpaceX via acquisition of xAI
4. SpaceX IPO offered at extreme valuation
5. Index fund inclusion rules waived for SpaceX IPO: profitability requirement, inclusion period cut from 90 to 5 days
6. Index funds are largely held by passive investors such as pension funds.
7. Index fund managers are not incentivized to exclude a SpaceX from their indexes. (?)
8. Holders of original X/Twitter debt (banks) incentivized to support the rule waiver since post IPO, SpaceX will have liquidity to service/pay the debt.
9. Passive investors are unable to rapidly respond to these types of changes because liquidating portfolios will incur capital gains taxes. (?)
10. SpaceX is in Texas jurisdiction, where shareholder lawsuits are not possible and must instead go for arbitration. (?)
Correction: index funds don't have a choice. They must follow the index, and so must buy the stock.
side effect: they'll have to sell other stocks, pushing their prices and weighting in market cap weighted indexes down.
> Passive investors are unable to rapidly respond to these types of changes because liquidating portfolios will incur capital gains taxes. (?)
For some active investors, yes. For passive investors (say you through your employer's pension fund), the tax isn't the problem. It's that the market has such a short time to adjust the price of these companies before indexes are forced to include them--and so might buy them at wildly inflated prices. Then, not too long after, the early investors can sell at still-high prices as soon as their lockup periods end. It's a massive transfer of wealth from pension funds and index investors to the early investors in those companies.
Maybe, most indexes do not have to follow the index. they just need to match the returns. An index fund manager has choice of what stocks to buy. However an index fund doesn't have enough managers to make many choices and so they normally buy just what is in the index. However all index fund managers know they are large enough that if they change their holdings "instantly" when the index it self changes the market will collapse and so the fund will under perform. Thus index fund managers are always trying to figure out what the index will do so they can start buying/selling stocks in smaller amounts before the change happens.
How each fund handles this is up to the managers. (and "total market" funds have less ability and need to do this)
Just look up the performance of Mutual Funds vs S&P500.
Again, the vast majority of the time they are matching the index stocks. However they have the right.
Typically managers pay is such that they don't get awards for guessing correctly, so they won't get any upside from a correct second guess, and they will see downsides from incorrect guesses.
Also unlike traditional funds, there are not enough managers to follow every company, so they can't pick stocks that will win just because they don't have enough to time research the stock. When they pick a stock they are just looking at the high level will this company perform like the other peers in the industry long term.
On the other hand, do you want to be the one who says, "As a rule we follow the index, but this time we decided to break our own rule, and as a result we lost X% of returns"?
Better wrong with everybody else than wrong on my own.
Changing one of those features undermines the reasons for including the index. Doing it specifically for the purpose of including a firm where large pension funds have also been extraordinarily critical of the governance structure as a particular source of risk [0] even moreso.
[0] https://www.reuters.com/legal/government/new-york-california...
Right, if they've advertised as an S&P 500 index fund, they have to robotically follow the S&P 500, stupid inclusions and all. Changing that strategy would require ... a lengthy process involving input from shareholders.
However, someone can still start e.g. a "classic S&P 500" fund that follows the old rules for inclusion, and I suspect we'll see that in response to these recent decision.
Nevertheless it is part of a pattern of weird deals in Elon’s companies. He’ll do anything to move the goalposts and turn his failures into successes. There is no norm he won’t violate, no boundary he won’t cross.
But the story is not about all indices being wrong, the story is about index management being corrupted. Like bond ratings on mortgages in the run-up to 2008.
"Im too busy to spend 30 minutes to move my retirement somewhere I trust" just doesnt cut it.
People should honestly read Killing the Sacred Cows it’s an eye-opener for anyone invested in 401k.
Any funds lying around are supposed to be for temporary imbalances, but became significant due to a major demographic imbalance: the Baby Boom.
Doesn’t it say that it’s a retirement fund, intended to be saved until retirement age? The 10% penalty is little more than a wrist slap level deterrent, too. It’s usually like ~1 year of returns. Not a huge deal if you need to dip into it.
(There’s plenty to criticize about the whole 401k system of retirement accounts. But these criticisms seem misguided)
People putting retirement funds in a pile of companies that often have little impact on local communities they live in.
They’re changing laws to fast-track sketchy IPOs, putting hard earned money at risk why? So we can send people on a death-mission to Mars?
Point being, they are doing what they will with other people’s money and won’t suffer the consequences. Removing the checks and balances is exactly how financial disasters happen.
No, they absolutely don't fear prison (but they should).
It's just the aggregate behaviour of a group of people optimizing for short term profit and self-enrichment over everything and without any need for long-term careful planning because for various reasons they are pursuing the short term at all costs.
Let’s not make billions into a footnote?
Is 5% a footnote, maybe.
Twitter has about $13B of debt, and about $1.5B of annual interest payments (that’s how much cash it actually needs to come up with this year). SpaceX has a planned IPO market cap of $2T and plans to raise $75B cash during the IPO.
It could nonetheless be worth trillions by the end of the day.
Simple as.
To explore this (hopefully parody) alt history, I don't know why the us gov wouldn't waited 70 some years for spacex to reach this point to grant that monopoly versus handing it off to the usual collection of defense contractors, eg raytheon (or whatever they're called now), Rand, etc.
Unfortunately, if you really start digging in to what is going on in the financial world, you will find he has violated no norms here. This is not a defense of Elon; this is a condemnation of the entire financial industry.
The whole thing scares me, honestly. It has never been a clean happy market where lots of honest people get together and are just honestly trying to make a better world for each other, there is no golden past where people were just nice or anything, but damn if computers don't let people build some structures that the robber barons of old could only have dreamt of. I'm really concerned that "index and chill" doesn't just have a "best by" date but that the best-by date could be in the past; I've heard of an awful lot of ways of exploiting it and other retirements schemes we have, this is just one. I find it implausible that these ideas exist but nobody is doing them.
There is video explaining the process
7. ETF managers that track an index aren't allowed to put discretion into what they buy. They offer much lower fees because they don't have to do any thinking, just executing on an algorithm.
8. SpaceX servicing the X/Twitter debt isn't really a question. The total amount of debt is equal to about one year of revenue at the moment, and it's under 3% of the expected market cap of SpaceX. It's less than a third of what SpaceX's IPO is expected to generate selling new shares to the public. It's a non-issue. On the other hand, the fees the banks will get for the IPO could easily convince them to support the rules waivers.
9. This is true of some passive investors. It is not true of pension funds (which are usually not passive) or 401ks or other tax-advantaged retirement accounts. It is likely to be partly true for any individual depending on how much of their assets is in a tax-advantaged account vs a regular account.
10. Yes to Texas. It seems like the arbitration part is likely to be true (SpaceX is certainly claiming it in the prospectus), but there is not the certainty of having a long history of litigation.
Returning to 2+3: The rolling up of all other private Musk companies into SpaceX certainly impacted the investors in those companies, and how much Musk owns vs other people. But the equity adjustments there would be interesting, not the debt.
> ETF managers that track an index aren't allowed to put discretion into what they buy.
I detect a contradiction here.
Pension operators are not typically passive. It's a different story to say that maybe they should be given that their returns don't always match up with index funds.
Morgan Stanley, Goldman Sachs, JPMorgan, Bank of America, and Citigroup
They all know how idiotic Tesla investors are, and they all want those idiots to pick up their bags.
Also: SpaceX debt is $20 billion.
Personally, I do think SpaceX is overvalued at these proposed IPO numbers and I will trade accordingly. So should anyone else who is confident and competent at taking appropriate market positions.
1. https://www.investmentnews.com/practice-management/spacexs-i...
which is exactly why public markets have always been a superior price discovery mechanism in comparison to private markets
Like if both these stocks become penny stocks what happens to the indices?
Isn’t the whole point that they are hedged across the whole market?
how could an index fund possibly have anyone's back? It's in index of the top 500 publicly traded companies. that's all. If SpaceX or Tesla or Anthropic or anyone else fall out of the top 500 then they fall off the index by definition.
I think a lot of these comments are coming from extreme emotions associated with AI and Elon Musk and not so much the way things work and will play out.
* S&P500: 0.08% – 0.12%
* NASDAQ-100: 0.47% – 0.70%
* Russell 1000: 0.1%
What Spacex/Elon are doing is sketchy as hell. But the numbers involved here are not terribly meaningful for your portfolio.
At IPO, $75B of Spacex shares will be bought/sold. The S&P 500 uses float-adjusted weightings, and the current float-adjusted total is $54T. If you are 100% invested in SPY, then about 0.14% of your holdings will be spacex on IPO day (75B/54T~=0.14%).
Obviously Musk and friends will start dumping some of the locked up float (~1.65T) when they can. But they definitely will not be doing so in a way that crashes the price or the market. That's in nobody's interest.
If you assume that half of the shares end up as float eventually (post-lockup), you'd end up owning around 1.6% of spacex in your S&P 500 etf (875B/~55T~=1.6%). That's not nothing but it's not significant enough that you should consider liquidating your 401k.
I'm picking on Spacex specifically because they are the biggest and imo, have the sketchiest/worst finances of the 3.
IF SpaceX is actually worth 400-500bn and it's a few hundred billion dollars of fleece, sure, that's a "small" amount (still.. lord almighty it is never enough for these people). But the hazard is that it is a fleece. That would shake confidence in the system, the bear case is basically unlimited at that point.
I dunno, the logical explanation makes sense, but markets don't work on logic especially on the short term. People fearing what other people will do and act in anticipation is known to happen.
Spacex/Anthropic/OpenAI almost certainly won't crash the market. The most probable thing to happen is that all 3 of these rally a surprising amount on their opening day, because there will be so much forced buying of the shares.
In my opinion, the most likely bagholders will be any retail traders that buy these stocks before the lockups expire.
I think it's very likely that we see the following:
IPO day -> all 3 close higher than opening price.
1 month -> price settles into a range 20-30% higher than IPO price.
6-12 months -> price is back near IPO price +-5%. Anyone who bought and held in the first 3 months has unrealized losses.
IPO's fairly reliably pop on day one. The performance in the first 6 months is mixed but skews slightly negative.
But the size of these 3, combined with the rule changes that are allowing them to be included in the indices much quicker than normal, means this time is very different than what we've seen before.
What you should do is have an Investor Policy Statement[0].
This should contain at least two things:
- your desired Asset Allocation (e.g. 30% U.S. stocks, 30% International stocks, 20% U.S. bonds, 20% International bonds) which should be decided upon based on specific, personal goals and risk tolerance
- your strict policy rules for if and when to do anything, if ever, e.g. (don't sell anything ever, or... rebalance your portfolio if one of your allocations is more than 2% from the desired goal)
Now... if say U.S. stocks took a big dump in the next 6 months (while other asset classes either grew, held steady, or simply didn't drop as much), when it would drop below 28% of your allocation, and you'd open a spreadsheet and figure out which other asset classes to sell a few percentage of, to buy the reduced price U.S. stock funds. (This is a policy-driven buy low, sell high strategy.)
[0] https://www.bogleheads.org/wiki/Investment_policy_statement
- yes 401k fund options are negotiated by people that don't know I exist, or care
- but... how I allocate my contributions to those funds is under my discretion
- and... I've never stayed somewhere long enough to have a $600k 401k balance. As soon as I'm gone, I roll it over to a private account that I have full control over (and much lower expense ratios.)
So I don't really care if I'm in the door or laughed out the door, because it has no material affect on how I manage my finances.
On what grounds? What tort have you suffered?
If you want change (and who wouldn't?) you need to talk to your representatives, not the courts.
Also some EU pension funds are already in the process of divesting from US markets...
And where will they go to?
https://www.visualcapitalist.com/124-trillion-global-stock-m...
Amazon is worth $2.81T right now and only represents 4.03% of the S&P500.
So a $1T share would represent less than 2% of the S&P500. This is significant for a single company, and 6% for 3 shit-tier companies (SpaceX, OpenAI and Anthropic) is even more significant, but we're far from "losing retirement if they go bust"-levels.
It is especially telling if we try to list out all the psychological biases at play:
- Availability & salience bias - vivid, memorable things feel more important than they are
- Narrative bias - humans tend to think in stories, and AI tells plenty
- Recency and novelty bias — new things feel more consequential than established ones (this one already drives like 80% of all HN content btw)
- Proportionality neglect - people are bad at intuitively grasping what percentages mean, even if they see the stats
- Social proof and reflexivity - coverage signals importance, and drives more coverage
- Status quo invisibility - things that work reliably become invisible (surprisingly, HN is really good in terms of working against this bias, I feel like at least 5% of all posts are some niche "inner daily workings" topics)
- Speculation premium in attention - uncertainty generates more discussion than certainty
- In-group signaling - cutting-edge things are status markers among influencershttps://en.wikipedia.org/wiki/Public_float
I hear S&P 500 is weighted on float rather than on market cap, while Nasdaq 100 is based on market cap.
> most share indices weight firms in proportion to the value only of shares they have released for public trading (the “free float”). For SpaceX, this means just the $75bn or so of stock it intends to issue in June—so its initial weight in the S&P 500 will be around 0.1%. The NASDAQ 100 is an exception, and has changed its rules to weight companies at up to three times their free float, in an apparent effort to woo Mr Musk. Even so, SpaceX’s probable initial weight in this $40trn index will still only be around 0.5%.
NVIDIA Corp NVDA 8.02%
Apple Inc AAPL 6.53%
Microsoft Corp MSFT 4.84%
Amazon.com Inc AMZN 4.01%
Broadcom Inc AVGO 3.36%
Alphabet Inc GOOGL 3.32%
Alphabet Inc GOOG 3.09%
Meta Platforms Inc META 2.23%
Micron Technology Inc MU 1.71%
Advanced Micro Devices Inc AMD 1.19%
Oracle Corp ORCL 0.99%
That's 40% of the S&P 500.
And if anything happens to the AI bubble all of these go down together. While they won't all go to zero and cause a "-40%" overnight, Nvidia's rise is so meteoric that they will trigger a -8% and the rest's valuation has more than doubled since 2023. Even Apple, which isn't much of an "AI company", is still following the AI-tech hype.
If Nvidia eats shit, and the others go -50%, that translates to an overall ~-24% on the stock market.
Before any contagion outside the tech industry is considered. Look at the Dotcom Bubble and a -40% to -50% crash is quite plausible.
This is the key comparison. It's not the "Pets dot com" side of the DotCom bubble, but the Telecom Bubble that followed. (All the AI startups that just repackage someone else's inference will go the way of Pets dot com, but their economic impact is minimal)
Certainly, Big Tech has massive cashflows. But those cashflows were priced into the 2023 valuations.
That is what makes the current valuations so ominous. Just a correction back to 2023 would be enormous. And as you note, a lot of these companies are taking on debt, dumping huge investments into AI. They're worse off than they were in 2023. Oracle may straight up go bankrupt.
> Oracle may straight up go bankrupt.
And nothing of value would be lost.
I do not want things to go kaboom, the CAPE index seems to indicate that what I want isn't relevant.
Google and Amazon fund Anthropic which returns the favor with cloud purchases at these hyperscalers. So, google and amazon show increased earnings (via anthropic share markup) and increased cloud revenues via anthropic purchase. SpaceX didnt want to be left behind, so, it signed a deal with Anthropic.
Meanwhile capex at hyperscalers, VCs, PE etc is funding the party. Capex is not a concern to anybody as it doesnt appear on either revenues or earnings at the hyperscalers.
Downstream is partying from all the spending (server makers, chips, disk etc).
Whats not to like ! this is a perpetual money machine. Lets partay !
And that is on top of the IPO companies losing value themselves, this seems likely to trigger a doom-loop until the market reaches a low enough value. This will likely trigger layoffs and companies reducing spending and investments further depressing the economy. Added inflation from oil prices and war.
This doesn't seem like one big balloon ready to burst, but more like a house suspended by hundreds of balloons and they are about to be ran over by an airplane.
You mean our pension funds?
Firstly, pension funds hold some share of stocks, but far from all. Second, pension funds hold a share of a pie that's not all that came out of the bakery. The bakery made a lot more dough, but much pie was spent (horribly mixing metaphors) to buy assets like property and private investments. So in reality pension funds hold a fraction of a fraction. Third, pension funds invested in equity is a replacement for the old pension systems of yore where companies were forced to set aside money and invest smartly to fund guaranteed income pension plans. They don't have to do that anymore. Instead they contribute to a 401(K) or similar in other countries, which lowered their costs and reduced company risk. For listed companies, those savings went to the shareholders, of which pension funds were just a fraction of a fraction.
I hope this illustrates that we, the salaried workers, see only a small fraction of the value created by increased productivity.
"Reasonable" is doing herculean amounts of work as usual, as it is implicitly operating under a thief's logic that the target didn't really deserve it anyway therefore if I steal all of it I will be justified.
We see the same shit when regiemes 'nationalize' segments of the economy and then wonder why instead of miraculously getting better without the 'exploiters' things turn to shit and absolutely nobody wants to trade with them. Empathy such a foreign concept to them that they don’t understand why merchants refuse to trade with those who steal businesses wholesale. Whose only response when confronted about their crimes is lame whataboutisms and victim blaming.
But this doesn't solve the problem in any way; it simply leads to production drop.
I mean, this is literally the logic of every communist government in the 20th century. They had the same logic that "given the mechanization of agriculture, food practically produces itself; you just need to throw a seed in the ground and give it a couple of tractor rides, and the earth will do the rest. Therefore, we need a tax on such activity, because we have enough resources to feed everyone".
In other words, it's literally a pure tax on automation. The results were mass deaths from starvation every single time.
There has yet to be an attempt at a centrally planned economy that actually had accurate data to plan with.
Not advocating for central planning but the important point is that these failure modes are possible under any tyrannical regime. For an example of where capitalist competition fell down in a similar way, look no further than the Irish potato famines.
Actually, no. What you're describing is more of a part of the next stage, designed to solve the already existing problem of famine, rather than its cause.
When communists come to power, they don't try in the first place to reorganize food production under strict centralization; this directly contradicts Marxism, according to which the state gradually withers away as a communist society is built. They simply try to redistribute what is already being produced in a more fair manner, to force peasants to contribute their "fair share" to society.
This causes production to plummet, people are dying of hunger, and only then the government takes control of organization of food production, and only after that do the factors you mentioned become relevant.
But the famine itself under communism, at least in its initial, most massive iteration, is not a consequence of a tyrannical regime, but is a consequence of the "taxation policy" being pursued.
It's absolutely correct that we can easily feed, clothe, house everyone. We can even give everyone comforts. It's mostly greed that prevents it. Greed that capitalism spends $trillions cultivating by brain-washing us all to want more and never be satisfied.
> It's mostly greed that prevents it
Greed is a human axiom. Anything that depends on humans not being greedy isn't worth the paper it's printed on. That's why capitalism won, despite its many faults: it requires human greed to function.
No, I don't think so. From a historical point of view, everything is quite clear: after communists came to power, the most severe famines occurred even before this totalitarian dictatorship is build, as a consequence of these very tax policies, the purpose of which is "easily feed, clothe, house everyone".
Totalitarian dictatorship comes later, as the problem transform to "we can easily feed, clothe, house everyone, but they don't want to, so we should force them"
The fact it became an all-inclusive all-year-round vacation reward is an anomaly which is getting corrected. Too bad for us we're the generations holding the bag.
Caring for grandchildren, running clubs and societies, giving their experience to local politics.
At 60, women who had daughters at 30, whose daughters just had children would be well placed to help with childrearing.
These sorts of things got lost in UK with equality and the pensions crisis.
I suppose when we look at things like the 4-day week, we imagine more time and energy available for social cohesion. Or I do at least.
Current system: Work until you die.
New system collapses: Work until you die.
New system lucks out: Probably get returns (pension).
Current system isnt great but works. Just fear uncertainity doubt here.
"back of the napkin" logic:
~2M FAANG employees (source: Gemini & this includes all types of employees...is your avg Amazon delivery driver regularly reading HN?)
~10M HN users (source: Gemini (via HN post :)) )
Data from 2022, so if we multiply it by 2 I would say 26k real hacker news users.
Wasnt the stat that for 1 creator there are 10 commenters and 1000 viewers?
Unless I'm misunderstanding this, buying at the sale price is the least risky way of purchasing the stock, which is what index funds should do. They should pursue the least risky way of indexing the market
More importantly, it allowed organic price discovery to occur. This eschews that process because the indexes are _forced_ to participate essentially at _any_ price, so rather than the market writ large having the opportunity to reward or punish the underwriter pricing of the IPO and determine any true idea of price, they're forced to buy the banker's narrative, which will intrinsically prop up the stock to some degree, but at what cost, and based on what underlying?
While I like the dreams Musk sells of self-driving cars so good they don't need steering wheels, of space colonisation and useful robot workers cheap enough that I could personally afford them, at this point I don't trust him in particular to actually deliver any of those things.
(And no, you can't convince me with some variant of "look at ${current version} of FSD" or "look at progress with Starship", etc., that's like responding to someone who doubts you can build a house by pointing to a pile of bricks: they're a necessary step, but aren't sufficient).
If you disagree with him, he might brand you a paedophile.
Then the rules were changed.
They don't, while timing certainly benefits, and potentially was triggered by them and OpenAI and Anthropic IPOs, these rules are not specific to only apply to SpaceX.
FTSE Russell (Russell 1000/2000 etc.) Adopted "fast entry" for large IPOs. Eligible companies (investable market cap above Russell Top 500 cutoff) can join after 5 trading days (previously quarterly rebalances). Also eased float rules with carve-outs.
https://www.lseg.com/en/media-centre/press-releases/ftse-rus...
Nasdaq (Nasdaq-100): Effective May 1, 2026, top ~40 market-cap companies can enter after 15 trading days (previously 3+ months). Adjusted low-float handling.
https://spotgamma.com/spacex-ipo-index-changes-spotgamma/
S&P Dow Jones (S&P 500): Reducing seasoning from 12 months to 6 months for megacaps and waiving the 4-quarter GAAP profitability requirement for large issuers.
https://www.wsj.com/finance/stocks/stock-indexes-are-contort...
So the question remains, why do they warrant a rule change?
The links above provide specifics as to the what's and the why.
It does not, of course, but when oligarch corruption runs supreme, it is whatever they want.
It's basically a money transfer from the average person to the poor richest person on the planet.
The true Great Filter is mental illness, apparently.
I wonder how much better Anthropic is doing.
I wouldn't bet on either Anthropic or OpenAI being profitable, we'll find out soon enough what this house of cards has inside, as they both want to IPO.
Though with the current US administration, as proven by the SpaceX IPO, laws are mere recommendations.
> While I wouldn’t say this is cooking the books, it’s definitely a shiatsu-grade massaging of the numbers. Anthropic has deliberately leaked a quarterly “profit” where it knows it can suppress its costs
https://www.wheresyoured.at/anthropics-profitability-swindle...
It turns out, there are many ways to skin a financial cat.
Are they breaking laws?
Instead blame the bankers and market who are putting buying in at 1.5T valuation.
If people really don't want SpaceX in their S&P 500 tracking ETF, we should see a S&P-ex SpaceX in short order.
It is absurd to blame "market" that did not had enough time to settle. "Bankers" are to blame for making this rules change happen.
It is entirely valit to blame people who changed the rules to allow this to happen.
"People" don't know much about finance to put it mildly. ETFs are created by market demand. Even "factors" ETFs are often based on completely irrational things like dividends, P/E ratios and other meaningless metrics. This happens because people are easily seduced by narratives ("solid dividend paying stocks", "low P/E ratio - good returns") which are plainly wrong but tempting to an average person.
Most people realized they don't know anything about finance and would like to pay someone (their fund manager) to make responsible decisions and expose them to wide market while avoiding blatant manipulations. Unfortunately the incentives are misaligned here. The managers' incentives are somewhere else. They are not paid by long term performance of their fund and they are disproportionally penalized for taking contrarian decisions.
People being force feed those mega IPOs losing money on them is bad for others as well - there will be less wealth for productive investments and more in hands of "players" (or scammers if you want to call it out). There might be a crash. Trust in financial market will plummet and hostile regulation might arise which other market participants will pay for even though they are not to blame.
I will not have exposure to those mega IPOs but I am in privileged position because:
-My understanding of financial markets is much better than that of an average person.
-I have quite a bit of time to follow all of it and react in time
-I pay 0% capital gain tax and use a broker with nearly 0 fees which allows me to rotate for free (almost)
-I know where and how to move my money so I don't lose advantages of wide market exposure
It took me a lot of effort to set it all up like that. An average person falls short on all of the above and is not in position to avoid donating part of their pension fund to Musk and Altman though. It is still bad for me for reasons mentioned above.
How so?
I wonder if Musk chose rocketry solely because of the ability to use it to drain money from government?
I'd argue that it certainly isn't.
Only for people that get their news from reddit.
Initial public offerings whose market capitalizations rank within the Nasdaq 100’s top members will normally be eligible to be included after 15 days of trading, Nasdaq said in a statement. The timeline is shortened from at least three months currently.
“Industry professionals, including asset managers and institutional passive portfolio managers, were mostly supportive of the Fast Entry proposal and proposed timing,” Nasdaq said in the statement.[0]
15 days vs 90 days isn't some huge shift nor is it inherently some "flaw." These changes have been asked for long before Elon entered the White House.
[0] https://www.bloomberg.com/news/articles/2026-03-30/nasdaq-cl...
This is why non partisan financial institutes like the FED and consumer protection groups like the CPB are important and we should have them as non corrupt and robust as possible.
Because it just doesn’t seem wise to trust asset managers with these kinds of things without a lot of evidence and transparency. The 2008 crisis should have taught all of us that much.
The suckers who have their retirement savings in some kind of index fund because all the experts have been saying, "Buy index ETFs and forget about it" for decades are gonna get fleeced, and the wealthiest get wealthier.
But, that philosophy came about in an era when there were protections for small investors that prevented the richest man on earth from dipping into your retirement fund to make himself even richer. I don't know how to be a smart investor when the game is so thoroughly rigged for a handful of billionaires.
I don't really have advice. If I were directly holding an index that tracks the Nasdaq 100, I would get out of it, and take the tax hit. But, I suspect the impact and risk will cascade outward. Nvidia has exploded in price based on actual revenue (though I suspect it will be temporary, and have to come back to earth in time). SpaceX is entirely fantasy land. It doesn't have revenue to justify anything like the price they're launching the IPO, and when indexes are forced to buy it, everyone holding those indexes provides exit liquidity for the same scammers who've been hyping it.
There's no there there, so anything that props up the valuation of SpaceX puts money in scammers pockets at the expense of everyone else exposed to the stock.
The threat is to end up with the bag, not that the bag explodes this month or the next.
I get your logic, but why all the handwringing over the short time frame for inclusion in these funds (days instead of a year)? None of that should be relevant if it's going to take so long to play out.
> unless you want to end up with 5%+ of your portfolio being invested in hopium by the end of 2028.
OK so, going back to the original question: the play is what? Move into bonds around IPO time and move back in when everything craters?
It matters at what price the forced buying starts.
>>OK so, going back to the original question: the play is what? Move into bonds around IPO time and move back in when everything craters?
It's hard to say what's the play is because:
1)For many people making any kind of "play" triggers a tax event
2)It's not clear what ETFs to choose as currently there aren't many good options.
Imo one decent choice out of available ones are ETFs based on MSCI World Quality Factor index. It's not ideal because it still excludes companies like Berkshire Hathaway (because of accounting rules) but it avoids many suspicious companies (like MSTR) as well as mega IPOs. Unfortunately those are more costly (0.3% instead of like 0.05%). If you are in EU you and want world wide exposure you still need something for emerging markets (EU based ETFs based on that methodology exclude emerging markets).
You can also become an active investor but that's a job and I don't think many people want to take on it.
The main problem with going with bonds is that you are giving up equity premium and you still need to time the market for a comeback and that's very difficult.
Can't they just be printed and massive funds borrowing money to buy shares?
S&P has not finalized a rule change yet.
S&P has historically been more conservative. My personal guess is they won't adopt all of the proposals.
> at the expense of large funds
At least that’s the general consensus, nobody would be worried about index funds buying stock if it looked like a good long term investment. Really the expectation that the stock price would tank is why there’s been a push to change the rules.
I sincerely hope S&P and Nasdaq rollback the SpaceX-targeted changes, but unfortunately I seriously doubt it.
Yes. And I see the argument for it. It’s hard to claim you represent the market if trillions of dollars are outside it for no reason other than newness or capital-structure weirdness. (I agree with excluding unprofitable companies.)
These indices have lots of competition. NASDAQ 100 lost basically zero money when they made these changes. If S&P makes them, I'm doubtful anyone will react either.
When S&P was still taking public comment, I put the link on HN. It got like two upvotes. This isn't something materially care about as much as like to get angry about on the internet.
Perhaps you got unlucky with the timing of your post, or title didn't grab attention in the /new feed compared to this post's. For all we know, whether or not they saw your HN submission, every critical commenter here may have also submitted a public comment to S&P.
The minimum marketcap for S&P 500 is ~23 Billion
The highest current marketcap of cannibas companiy is $3 Billion
> S&P has not finalized a rule change yet.
If you were responding to someone saying the benchmark indexes were changing their own rules?
Like the actual intent of the comment and not just observing reality like someone saying the sky is blue.
Not particularly. When I posted the request for comment to HN it got crickets [1].
Not enough people care about this. And the "safe" option has kind of shifted with the other index providers having moved first. That said, there were a lot of proposals and I'm not expecting all of them to be adopted.
B: but what about your emotions
Very glad to see HN stereotype being upended :)
That's a request for an opinion, not an emotion.
And more importantly forces them to sell the rest of the market.
Who will be on the other side of these trades? I suspect the stock market is not sufficiently liquid for all of that to happen in a single day without the rest of the market seeing a significantly depressed price, and index holders effectively gifting value to everyone else by effectively pre-announcing their large trades.
Most popular passive indexes are S&P 500 and some total markets. Total index, like the one used by VTI, is likely the best spot in this case. They have not changed any rules, as far as I know.
90 days or 5 days, it doesn't really matter because the float will be tiny due to the 6 month lockup. What kind of price discovery are we expecting that would happen in the other 85 days?
Not really: https://www.reuters.com/legal/government/spacex-allow-early-...
S&P hasn’t changed any rules yet.
The tiny float and just a few days before the index funds buy means they have to buy without any more revenue / earnings info than was already published pre-IPO. 90 days is a quarter, so there WILL be more price discovery before a 0 day index fund seasoning period.
You can’t imagine a scenario where he goes lunatic and does something wild (again)?
> The only major cliff will be Elons shares
> My point was that when his shares become sellable will be the only time there is a giant leap in available shares.
Another thing that is special about Musk's "vesting cliff": He has the longest in modern history: one full year. I cannot think of any other IPO in the last 10 years where the founder had such a strict/long vesting cliff. While I think the "super shares" (with 10x voting rights) are bullshit, I do think the very long vesting cliff is a good sign.
Buy MSCI World, enjoy the 0.04% p.a. fees and minimal idiosyncratic risk, and relax.
Index rebalance traders will reduce your annual returns by less (probably much less) than 0.1%, but there is no better alternative for you at this moment in time.
Remember also: index funds are some of the participants most keen to lend out their shares to short sellers. It's one of the rare ways they can boost returns above the raw index they follow.
I know very little about markets, but: aren't the short-sellers just going to provide liquidity for the big index funds? Like, if the funds HAVE to buy SpaceX, and the funds are enormous, wont every single stock sold short be immediately gobbled up, as well as pretty much anyone else wanting to sell? Even if everyone else is selling like mad, it wont affect price much at all?
Maybe this is naive, but if these enormous funds are more or less forced to buy SpaceX, it seems impossible that "actual price discovery" is going to happen in any reasonable amount of time, and the short-sellers will be screwed.
1. Exchange your market-cap funds for S&P 500. Afaict, even with their own rules changing, they will wait up to 6 months (as opposed to 12) to let SpaceX in. This is the simplest solution that buys you time without losing other gains in the market, assuming your existing funds were broad market-cap funds. The idea here is to wait for ~5 months and see if you still want/need to exit S&P before they let SpaceX in, or pick another option.
2. Exchange your market-cap funds for RSP, an equal-weight fund. This is also simple and reduces your risk, as SpaceX's allocation of the fund would only be 0.2%.
3. Exchange your market-cap funds for a selection of different funds in order to replicate the previous allocation. Buy small-cap and mid-cap funds, and buy ETFs that cover the market without including tech. This is more complicated, but not really that complicated once you learn how to exchange funds. Still mostly passive, you're just actively managing your allocation into different indexes. Downside is you lose the gains from tech.
4. Exchange all your index funds - temporarily - for a money market fund or other low-risk, low-return investment vehicle, until SpaceX price settles down. This is the absolute simplest option, least risk, least reward. You lose all the gains from the market during this time, but a percentage of your fund doesn't disappear overnight. If you're nervous, it's safe to do this by June 11th and sit on it until July 5th and see what you'd like to do then.
You probably DO NOT want to do this for non-retirement funds, as you will get hit with capital gains taxes. You would have to estimate how much you think your portfolio would drop due to SpaceX's overinflated price falling, and compare that to your potential tax bill from rebalancing. It's almost certain that your tax hit would be higher.
No, it depends on the index in question.
But the point is that we have notable index funds which are marketed to customers as having the intention to own segments of the market according to certain rules, and they are changing those rules with relatively short notice and for reasons that seem suspicious to many customers.
In the US, you would likely also have to pay capital gains taxes for such a trade. (I think.)
In Singapore, in contrast, swapping between funds like this would not have any tax implications.
I personally have moved my retirement accounts to bonds while being more aggressive with my personal investments.
and remember the best way to make a small fortune is to start with a large fortune.
https://etfdb.com/etfs/size/large-cap/
You could switch to one that focuses on stocks which pay dividends, for example. That should provide a bit of protection against an AI market crash:
https://etfdb.com/etf/VIG/#etf-ticker-profile
So-called "smart beta" ETFs are also interesting. https://etfdb.com/themes/smart-beta-etfs/
Here are some factors I would expect to rule out the frothiest stocks:
"Quality Factor ETFs are made up of securities deemed to exhibit strong fundamental characteristics. These ETFs screen for stocks that have healthy balance sheets, encouraging growth prospects, and consistent improvements in their earnings."
https://etfdb.com/themes/quality-factor-etfs/
"Value-centric ETFs invest in securities deemed to possess value characteristics, including those operating in stable industries with relatively low price-to-earnings ratios."
https://etfdb.com/etfs/style/value/
"Low Volatility ETFs invest in securities with low volatility characteristics. These funds tend to have relatively stable share prices, and higher than average yields."
https://etfdb.com/etfs/investment-style/low-volatility/
Be sure to check the expense ratios on smart beta ETFs. Generally, the more sophisticated the stock screening, the more they will charge you in management fees.
As long as you're thinking about your portfolio, you may wish to consider international diversification in case the US economy implodes somehow: https://etfdb.com/themes/international-equity-etfs/
Personally, I keep my portfolio extremely conservative. My bet is that if the singularity arrives, we will all either die, or get UBI. I don't particularly care about having more moons than the other guy: https://www.astralcodexten.com/p/you-have-only-x-years-to-es...
> Although Nasdaq has already shortened the “seasoning” period before index inclusion to 15 trading days and FTSE Russell has slashed its waiting time to five days (and S&P Dow Jones is reportedly considering something similar), most share indices weight firms in proportion to the value only of shares they have released for public trading (the “free float”). For SpaceX, this means just the $75bn or so of stock it intends to issue in June—so its initial weight in the S&P 500 will be around 0.1%. The NASDAQ 100 is an exception, and has changed its rules to weight companies at up to three times their free float, in an apparent effort to woo Mr Musk. Even so, SpaceX’s probable initial weight in this $40trn index will still only be around 0.5%.
So people who hold ETFs that track the S&P 500 probably don't have too much to worry about. People invested in the NASDAQ 100 probably have more to be outraged about - but then again I suppose if you're invested in the NASDAQ 100, you may be consider more exposure to SpaceX to be a good thing.
At .1% they'll have the same weight as something like DoorDash.
im not a finance guy, can someone explain to me why the nasdaq would want to "woo" someone specifically? what benefit would nasdaq get? or, alternatively, what harm would befall nasdaq for not woo-ing musk?
They are not saying these 500 companies are going to be the most successful in 6 months or 10 years. At one point Enron was 0.6% of S&P500 because it was a large company, not because the directors at S&P500 thought the management were honest people.
If you don't like that, fine, don't buy S&P500 and buy stocks or other funds that do have companies you like.
It isn't called the S&P495 because they kick out 5 of the biggest companies that some people consider to be risky.
I personally think its super risky to want to be Diversified and NOT include any exposure to SpaceX. Yes, Elon is unique but that doesn't mean his companies are going to fail especially given the potential risk of AI changing the world. Is IBM going to keep selling overpriced IT outsourcing in 5 years?
And why do people want to buy the entire market in the first place? They want to diversify and insulate themselves from a single company crashing their portfolio value.
What are people afraid of right now? They're afraid of a single company crashing their portfolio value.
Why are people afraid of their portfolio value crashing? Because these 3 companies will fundamentally increase the overall risk and volatility of the index.
Do you see the problem?
There are indexes that invest equal amounts of money into all companies, so Nvidia doesn't dominate. Or you can pick low growth high dividend indexes to insulate against AI. Or just grab Vanguard LifeStrategy if you don't want to think.
The current situation is unusual. No index can handle all situations. Either adapt or use a fund that does the thinking for you, right?
If the US does something to destabilize the dollar, will economists be running around saying “the dollar was never intended to be used for that purpose!”? No.
It doesn’t really matter if the index “wasn’t supposed” to be something it became. The problem is the same. The only difference is who you blame.
I want to believe the world is full of good people but I read stuff like this and realize otherwise.
Words have lost all meanings.
that's what fiance is about after all, capturing the saving of working people :) "It's not finance, it's your pensions" https://theloop.ecpr.eu/its-not-finance-its-your-pensions/
[1]: https://www.forbes.com/sites/garthfriesen/2026/04/25/spacex-...
There is nowhere near enough burning rage for this absurd fleecing of the public.
Similarly Space-X’s IPO valuation is about “data centers in space” vaporware hopium and “timeshare all the GPU time that Grok isn’t using”.
There’s a trend with Musk’s companies.
Waymo is actual FSD.
Jack Barker’s rather blunt monologue in SV about how the stock is the product is more true than ever. It felt very heavy handed at the time but it’s only proven to be more the case than I thought.
Plus as others have said, usually all of the decision makers have a bunch of stock exposure and will prioritize their own financial gains over pretty much anything else.
These are often both weak signals, though. They'll govern very high level decisions, but all the day to day is inside the company. Just as I want a return on the money in my bank account (as I was promised) investors want a return on their money too, and as you say, the executives and board should care about making sure the people who put money into the company are getting a decent deal out of the arrangement.
EDIT: guys, it's sarcastic... since the parent was talking about latency, cooling is something that is even worse in space than latency
They are planning to capture 100.7% of it?
To quote a message I wrote on a finance channel on telegram:
The TAM for "enterprise applications" at 28 T sounds both too much and too little: by the time the tech (and/or overall economy) allows it to reach that number, that number itself will look unimpressive, and this kind of scale seems to be reachable with ground-based more easily than with space based (at current energy prices, even that TAM is only about 2% of being Kardeshev 1).
Feels like Musk did vibe-economics for "how big is the global digital economy?", much like the claims about factories on the moon making data center satellites looks like he prompted grok with "if I tile the moon with solar powered factories and mass drivers to launch them, how many TW can it launch per year?"The world's GDP is about 100T. That would mean more than 1/4 of every expenditure in the entire world would go into buying AI or by AI providers into their consumables.
That number is just bullshit.
AI today can't do all desk jobs, I don't know how far we even are from that given the spiky nature of ML, but it smells like this IPO is using that as the justification for the claim.
Actively managed funds is $18T. And, for example, the S&P500 alone is $69T.
[0] https://www.ici.org/research/stats/combined_active_index_042...
The 12 largest companies in the USA together have that market cap, so probably not.
Index funds in total had about5 $7 trillion in 2021 [1].
It just takes a narrative shift to tumble it - ex: quantum to break crypto security.
[1] https://www.spglobal.com/spdji/en/methodology/article/sp-sha... [2] https://www.spglobal.com/spdji/en/documents/methodologies/me... [3] https://www.spglobal.com/spdji/en/indices/equity/sp-500-shar...
Probably not this reasoning.
> S&P 500 Shariah Industry Exclusions. The index universe consists of all the constituents in the S&P 500 Shariah, excluding companies classified as part of GICS sub-industries 20101010 (Aerospace & Defense), 40203040 (Financial Exchanges & Data), 40201060 (Transaction & Payment Processing Services).
it probably makes it easier to ship in europe where some private banks and pensions (eg denmark gov) ban defence investment
> the opinion adopted when formulating this index
> S&P Shariah indices ... are overseen by an independent Shariah Supervisory Board consisting of a panel of internationally renowned Islamic scholars. This board is facilitated by Ratings Intelligence Partners, a London and Kuwait-based Islamic finance advisory firm.
I can't picture any scenario where this ends well.
SpaceX will be ~0.125% of the index. The actual amount of buying is in the low tens of billions, and given these are $30 trillion+ markets, this is hardly anything to fret about.
Which really really sucks. We all see Trump whoring out the whitehouse for his trailer park presidency. But I didn’t anticipate the markets kowtowing like this. lol bankers gonna be bankers tho nvm
Still criminal, and also, anyone buying this individually is a fool.
They are buying it at IPO pricing
https://api.substack.com/feed/podcast/260347/s/233172.rss
https://podcasts.apple.com/us/podcast/conversations-with-col...
https://open.spotify.com/show/0Cj2lIpGxkrw1RFVIPTa6a?si=f41c...
* Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings
* Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize
* OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble
I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
That is a hell of a statement to make (their earnings are mostly negative, after all, except nvidia). Would require exceptional evidence, which doesn't seem to be there.
> * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize
This does not reconcile with the large amount of empty datacenters and GPUs which have not been installed: https://www.wheresyoured.at/ais-economics-dont-make-sense-ad...
> * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble
OK? It could also mean there is.
> I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
Even with subsidized demand Microsoft still ended up cancelling over a gigawatt(!) of planned datacenters already back in 2024. But yeah, their arguments are missing a lot.
Hyperscalers are in big trouble if the build out suddenly stalls. Even Nvidia and Micron are going to see their value significantly trimmed if it looks like growth is stalling. With such concentration at the top of the S&P among tech companies and with SpaceX, Anthropic, and Open AI, three companies that probably burn a combined 50+ billion a year. The whole stock market will be a tinderbox.
The whole thing is so private capital can get their exit. Default rates of private capital are already at 6%. Banks are exposed so they are on board with the fraud.
How would you define stalled? Hardly anything has been built in the last 2 years (and most of those juicy new GPUs must be sitting in a warehouse somewhere waiting to be installed, together with all of our RAM and HDDs).
OpenAI and Anthropic's can go bust, but ads, windows and cloud hosting would still make a ton of money without them.
Funny how this different framing of the exact same person provides a completely opposite expectation of their incentives behind commenting on whether AI valuations are a bubble.
Print money. Push most of it into cheap credit for giant corporations and asset owners. Let a little trickle into the real economy so ordinary people feel temporary relief. Then let inflation quietly do the dirty work.
The public pays through higher prices, weaker savings, and future debt.
The powerful collect the upside.
That is the game: privatize the profits, socialize the losses, and call it capitalism.
And all of this is legal under the disguise of "protecting the economy for regular folks", and they can keep doing it repeatedly.
Also very bold of you to assume voting does much.
(coming from a 22 year old who votes at every federal, state and local election).
Logically, it seems insane that people who live on other people's taxes have the right to vote. Officials, public sector employees, and anyone else who receives money from the government rather than contributes to it shouldn't vote.
Why? It could be sudden. It could be slow and gradual. I've seen no reason it needs to be one versus the other.
> "Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
More: https://www.gurufocus.com/news/220058/seven-quotes-from-warr...
Just investing less in risky things on the run up means you personally perform worse so even in known bubbles you don't see reasonable slow downs instead of disastrous pops.
What? Source? Plenty of investment bubbles pop before the bag is passed.
This thread involves a lot of people looking at something they don't like and presuming karmic forces will give them what they deserve. There is no reason these companies, even if massively overvalued, have to "pop."
That's fundamentally different from e.g. the financial crisis, or the 2023 bank collapses, or even the dot-com bubble. Those did not have the ability to self correct. There was no slow deflation other than through a bailout.
This is a wild thing say without any qualification.
It’s really not. Bubbles are notable because most elevated asset prices slowly go down. And they have common characteristics that force the reckoning. Usually debt. Sometimes operational leverage.
As I see it, this is the exact same situation - wildly overvalued companies based on investor exuberance, the underlying business is not capable of supporting this kind of valuation. IPO tends to be the crunch point at which this overvaluation is exposed. Once exposed, the valuation correction spreads to other similar businesses quickly and the bubble pops.
What's the self-correction ability that AI companies have?
A lot more revenue. Dot coms were going public pre revenue. And Anthropic is profitable. Both it and SpaceX wouldn’t be dependent on further stock sales to stay alive—that lets them weather a downturn.
As with the dot-com bubble, there is a lot of voodoo accountancy (and flat-out lies) about the actual situation here.
As I understand it, the basic problem is that the big three can't charge enough per token to cover costs because they're in competition with each other (and one of those is Google that can afford to buy market share using its other operating revenues), and the OSS/cheap Chinese models.
And this situation is unlikely to get better in the short term because building cheaper per-token capacity is very expensive and time-consuming.
[0] https://www.wheresyoured.at/anthropics-profitability-swindle...
They don’t need to fix it in the short term.
Look, this could be total nonsense. But what won’t happen is Anthropic or SpaceX disappearing inside a year. That was true in the 90s because the only cash flow going into those companies came from investors.
Agree, some of these are valid businesses. But they are also massively overvalued on that underlying valid business, because of investor enthusiasm. When the bubble pops they are going to have real problems because of that overvaluation. Hopefully they survive, as a lot of the dotcom businesses did.
I think the real bloodbath will be the second-tier businesses that are mostly reselling cheap tokens to a market niche with custom prompts, and also massively overvalued as "AI businesses". And that kinda mirrors what happened in the dotcom bust - all the overvalued "webscale" businesses that hadn't really worked out a solid model yet went to the wall immediately
OpenAI seems to have made debt-like commitments to spending on infrastructure. If those are indeed binding, they may have less flexibility than the others. (If Anthropic’s revenue growth stalls and its valuation halves, it should still be a going concern.)
The point is that nobody wants to be the first out of a hot market nor the last so that bubbles everyone knows are bubbles first hang on despite it being broadly believed to be so and then crash as people head for the exits.
Broadly people are taking on debt to realize profits that may not exist. Retrospectively widely acknowledged bubbles like every crash in the last century all popped im not aware of any big enough to cause a recession that petered out slowly. Since we don't need to look up 100 years of crashes together can you name some similarly large issues that were resolved slowly over time?
It's the same scenario of a ponzi scheme. Everything looks fresh and fine until everyone realizes there is nothing in there.
Robber Barrons existed from like 1860 through 1915 and extracted the wealth of many people, including Native American tribe lands.
Like this shit can keep going until we decide enough is enough and actually change our society.
There is no consistent definition of a bubble. We have no fundamental reason current valuations have to collapse suddenly.
> We have no fundamental reason current valuations have to collapse suddenly.
I would agree, but i think that is just saying that the current situation is potentially not a bubble. Which may be true. We will only find out after the fact.
I’ve seen it commonly used to refer to any period of high multiples.
If everyone is in the bubble and it pops, everyone is in the same boat, so you’re not really going to be poorer than your peers by comparison.
If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done.
Also, just because something is a bubble doesn’t mean it has to end in a devastating pop. Sometimes bubbles expand and then just get diffused. The exponential rise stops and prices plateau, but it just becomes a new normal and things stagnate for a while before resuming normal upward growth.
Chamath says Warren Buffett outperformed the $SPX by 2 times pre-2000’s because he used "insider info".
Berkshire Hathaway completely exited its investment in Paytm (One97 Communications) in November 2023. This divestment occurred just two months prior to the Reserve Bank of India (RBI) initiating its strict regulatory and KYC-related crackdowns on Paytm Payments Bank in early 2024.
I think Warren has been doing insider trading.
> If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done.
I don't get? First scenario, you get richer vs. the average and in the second you gt poorer. So in total you average out? I don't see how not participating makes you poorer in average.
> Sometimes bubbles expand and then just get diffused.
That's not what a bubble is. A financial bubble is defined by the "burst" at the end.
If SpaceX tanks and 401ks are left holding the bag, this could result in the biggest class action lawsuit ever.
Check out previous flops like Enron (only $60b) for examples of lawsuits.
[0]: https://www.bloomberg.com/opinion/newsletters/2026-05-21/spa...
When money is lost in the order of billions, someone is getting sued.
but that doesnt mean any money gets recovered at all. Musk sure as hell aint giving anything back.
The fix is to simply not buy it - those 401k aren't completely passive, you can choose a different investment (instead of NASDAQ index).
Would either published indexes or investment funds exist, if suing them for poor performance was anything resembling that easy?
I'm thinking "no".
It's quite sad that the pillar of American life that is the 401k is given to shady fund managers. The law should be that if you manage a 401k you must be a fiduciary. If that were the case then no one would be bag holding these fake valuations because they'd be liable for negligence. Right now they're just in on the scam.
Away from large cap stocks to what?
I'm not sure you'll come out ahead. (Personally I don't get the outcry, except for nasdaq which has fairly stupid rules, delaying the inclusion of megacaps won't make the problem go away, but probably increase since the float will be massively larger). It's inherent to being a passive index.
Regular people want to invest so they can make money and companies want people to invest so that they can raise money. So pretty much everybody wants the 401k money to be invested in the stock market.
But the issue is that investing in the stock market is very technical, so some smart asses invented the index funds to make it easy for daddy and mummy to put their retirement accounts to work.
The index has safeguards in place to try and reduce its volatilty. So people are happy, cause they are investing in stock without having to look closely at what it is they bought.
But if suddenly some people change the safeguard rule, so that their buddy can dump their overvalued stock over people who think they are investing relatively safely, then it can be argued that there is foul play.
People are not finance specialists and they are heavily incentivized to buy index funds, so they need to trust that the people who are telling them to invest are not hiding things from them. If that trust is broken, lawsuits will follow.
It’s like: imagine you own a Toyota and have a maintenance contract with Toyota, and one day you have your car serviced and they tell you they changed the brakes. They tell you the brand of the new brakes and they tell you it’s fine while in fact, they put some cheap garbage that fail after 100 km of driving.
When the brakes fail and your car falls off a cliff, you go and see them and they tell you: “yeah those brakes were bad, but we told you we put them in, you could have looked up that these were bad, it’s all over the internet, so that’s on you”.
A "lawsuit" isn't a concern for the likes of Musk.
He's got the money to pay lawyers, politicians, and influencers. He's spread this risk around to the right people; if he goes down, they're going down with him, too.
At a certain point you have to start jailing people for long periods of time. I don't mean the Milken, Belfort, or Skilling treatment. I mean being placed away for 30+ years in medium-security facilities at the least.
Bernie Madoff was sentenced to 150 years in prison, if that counts. But then he had committed a crime, which is the usual "certain point" we wait for.
Think about it: you have hundreds of thousands of pages of evidence that the hyper-wealthy may have trafficked minors across state and international borders. Only one person is in prison over it, and her cell gets upgrades.
35 years ago this would have been a slam dunk for the opposition party of any republic. Instead of standing ten toes down on it, opposition leaders are doing... what exactly? Going on with business-as-usual, for the most part. They should be attempting to add language to every single bill that comes across the floor to see more done. They aren't.
I think stock trading shenanigans are far lower on the list of moral outrages, particularly given Congress' predilection for insider trading.
The guy called 401(k)s a Ponzi scheme. Now, he's coming after them to loot.
SpaceX used its massive IPO and listing fees (and the prestige of being the largest IPO ever) as leverage. Index providers and exchanges saw financial incentives: listing fees, trading volume, data sales, and long-term revenue from asset managers. Reuters reported that SpaceX advisers contacted major index providers (including Nasdaq) to discuss early index entry, and that SpaceX was leaning toward listing on Nasdaq only if it got early inclusion in the Nasdaq 100.
The rules built to protect passive investors were waived:
- S&P 500’s 12-month seasoning and 4-quarter GAAP profitability requirement → waived
- Nasdaq’s seasoning window (90 trading days) → cut to 15
- FTSE Russell’s seasoning window → cut to 5 days
Meanwhile, Danish pension fund excludes SpaceX citing governance and valuation (Musk holds approximately 42.5% of the equity, but commands roughly 83-85% of total voting control): https://www.reuters.com/legal/transactional/danish-pension-f...
S&P hasn’t announced a final rule change yet.
Yes. Literally right.
There is no second guessing because no decision has been made. A consultation was put out. I’m expecting it will be adopted in parts. Like, the market hasn’t priced in a full rebalancing.
Why not just say SpaceX is being added to the SP500?
You can complain about the discretion to add it to the SP500. But that's irrelevant in terms of whether or not its "forcing" people to invest in it. Arent you upset people are forced to invest in Apple, Bank of America, etc.?