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.