"every single person with a retirement account, or student savings account, or mutual fund, will be forced - not asked, not suggested - required by law, to buy SpaceX stock."
Anyone know what she means here? Does she mean this happens to those who will buy index funds? If so, nobody's being forced to buy an index fund. It's a choice made by the retirement account company.
That people who I have part of their retirement invested in NASDAQ index funds will buy SpaceX's grossly overpriced stock unless they explicitly sell their fund and buy one built on a more principled index like S&P 500, but that incurs a tax liability unless its in an IRA.
SPY (top S&P500 fund) has $700B assets under management.
VTI (Vanguard Total ETF) is $600B + VTSAX (Vanguard Total Index Admiral) is $489B. QQQ is another $480B AUM.
So we're easily talking about $Trillion++ for funds that are described by this post. (VTI, VTSA, QQQ alone). With dozens and dozens of more funds that are participating in this whole "passively buy stocks" scheme being discussed.
> So even though SpaceX would be a $1.75 trillion company, many index funds that include it would have to treat it like a $70 billion company. In Vanguard's total-market ETF, then, SPCX would enjoy a similar weight as $73 billion retailer Ross Stores (ROST) — currently the 157th-largest stock in VTI, accounting for about 0.1% of its assets.
So someone with $10,000 of VTI might have $10 of SPCX. Not a big loss for them even if it went to zero, and the whole point of that index is to have some of everything.
With $1 Trillion or so in assets between VTI and VTSAX, that 0.1% is a guaranteed purchase order of $1 Billion in SpaceX stock purchases. A sizable minority of the current float.
This is important because Anthropic and OpenAI (and likely future companies) are planning to continue to take this money from VTI / VTSAX fund holders.
I'm under no assumption that SpaceX is unique here. This is now "the new normal" moving forward, unless a new law is introduced (or the rules otherwise change).
VTI arguably because they must play along, being a "total market fund". Nasdaq changed their rules and then force bought 3x more than usual.
These are NOT small funds. Rather significant parts of the US Economy (VTI, QQQ, among many other ETFs and derivatives) were force-bought in last week, and we are now all in for the ride to watch that portion of our money disappear.
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S&P500 is an important player who managed to avoid SPCX (1 year rule + requirements of profitability, of which SPCX isn't profitable yet so... lots of disqualifications here). So we have to give credit where credit is due.
VTI / Vanguard Total Market is a grey case. I once believed in it but now with SPCX and other abusers (Anthropic and OpenAI) clearly aiming to specifically screw VTI's strategy over, it might be finally time to call it quits and leave VTI behind. I don't know for what though.
Nasdaq doubling down and specifically changing their rules to help this whole crap is the ultimate level of disgusting. VTI is just being consistent with their strategy. Nasdaq is making special exceptions explicitly for these cases.
The VTI fund tracks the CRSP Index which is administered by Morningstar, in the same way SPY is a fund managed by State Street but tracks the S&P 500 which is created by S&P Dow Jones Indices. So, it’s simply inaccurate to describe Vanguard as doing anything in this instance, besides licensing the same index they always have for their VTI fund.
> First, they will be automatically added to the NASDAQ 100. And because of that, every single person with a retirement account, or student savings account, or mutual fund, will be forced - not asked, not suggested - required by law, to buy SpaceX stock.
Just move your funds from mutual funds tracking NASDAQ (if you own any) to a different fund tracking S&P. Inconvenient but not the end of the world. You still have about two weeks to do so; I did this last week. Then in 6+ months when lockups expire and insiders have dumped, you can move money back if you'd like.
Also, SpaceX only sold a tiny portion, and Elon is only a trillionaire based on unrealized value of unsold stock. If it crashes before he sells any, he might go back to being a "normal" centi-billionaire.
> ...that they are going to immediately devalue as soon as they can. It's a classic pump and dump con. And you're the mark.
He's actually doing the opposite, there's a long lock-in period.
"every single person with a retirement account, or student savings account, or mutual fund, will be forced - not asked, not suggested - required by law, to buy SpaceX stock."
Anyone know what she means here? Does she mean this happens to those who will buy index funds? If so, nobody's being forced to buy an index fund. It's a choice made by the retirement account company.
It's definitely possible to have no say, for example of how your pension is managed. This person is exaggerating for effect though.
That people who I have part of their retirement invested in NASDAQ index funds will buy SpaceX's grossly overpriced stock unless they explicitly sell their fund and buy one built on a more principled index like S&P 500, but that incurs a tax liability unless its in an IRA.
So I can buy SpaceX stock before June 30th and sell it on July 2nd and will 100% have a higher price?
Yeah, nice wet dream. If it would work this way, everyone should bet their life savings on it.
Yeah no. Not really.
That is what was tried. The S&P 500 didn't play along.
A comparatively small number of index funds & retirement accounts that use them will get caught. The majority won't.
Right -- if you're invested in the NASDAQ 100 (most people aren't, directly or indirectly), get angry. Or get out, if you can and it's not too late.
Everyone else has dodged this bullet. I'm surprised, pleasantly, that S&P et al actually made the right choice here.
And the Bogleheads who bought into VTI and Vanguard Total Admiral Funds?
The Nasdaq is small?
The Nasdaq exchange is important. The Nasdaq index, not so much.
SPY (top S&P500 fund) has $700B assets under management.
VTI (Vanguard Total ETF) is $600B + VTSAX (Vanguard Total Index Admiral) is $489B. QQQ is another $480B AUM.
So we're easily talking about $Trillion++ for funds that are described by this post. (VTI, VTSA, QQQ alone). With dozens and dozens of more funds that are participating in this whole "passively buy stocks" scheme being discussed.
It also matters how much they weight it.
> So even though SpaceX would be a $1.75 trillion company, many index funds that include it would have to treat it like a $70 billion company. In Vanguard's total-market ETF, then, SPCX would enjoy a similar weight as $73 billion retailer Ross Stores (ROST) — currently the 157th-largest stock in VTI, accounting for about 0.1% of its assets.
https://www.kiplinger.com/investing/index-funds-and-mega-cap...
So someone with $10,000 of VTI might have $10 of SPCX. Not a big loss for them even if it went to zero, and the whole point of that index is to have some of everything.
(QQQ is a different story.)
With $1 Trillion or so in assets between VTI and VTSAX, that 0.1% is a guaranteed purchase order of $1 Billion in SpaceX stock purchases. A sizable minority of the current float.
This is important because Anthropic and OpenAI (and likely future companies) are planning to continue to take this money from VTI / VTSAX fund holders.
I'm under no assumption that SpaceX is unique here. This is now "the new normal" moving forward, unless a new law is introduced (or the rules otherwise change).
VTI and Nasdaq played along.
VTI arguably because they must play along, being a "total market fund". Nasdaq changed their rules and then force bought 3x more than usual.
These are NOT small funds. Rather significant parts of the US Economy (VTI, QQQ, among many other ETFs and derivatives) were force-bought in last week, and we are now all in for the ride to watch that portion of our money disappear.
--------
S&P500 is an important player who managed to avoid SPCX (1 year rule + requirements of profitability, of which SPCX isn't profitable yet so... lots of disqualifications here). So we have to give credit where credit is due.
VTI / Vanguard Total Market is a grey case. I once believed in it but now with SPCX and other abusers (Anthropic and OpenAI) clearly aiming to specifically screw VTI's strategy over, it might be finally time to call it quits and leave VTI behind. I don't know for what though.
Nasdaq doubling down and specifically changing their rules to help this whole crap is the ultimate level of disgusting. VTI is just being consistent with their strategy. Nasdaq is making special exceptions explicitly for these cases.
The VTI fund tracks the CRSP Index which is administered by Morningstar, in the same way SPY is a fund managed by State Street but tracks the S&P 500 which is created by S&P Dow Jones Indices. So, it’s simply inaccurate to describe Vanguard as doing anything in this instance, besides licensing the same index they always have for their VTI fund.
> First, they will be automatically added to the NASDAQ 100. And because of that, every single person with a retirement account, or student savings account, or mutual fund, will be forced - not asked, not suggested - required by law, to buy SpaceX stock.
Nope, that's not how it works. Flagged.
Just move your funds from mutual funds tracking NASDAQ (if you own any) to a different fund tracking S&P. Inconvenient but not the end of the world. You still have about two weeks to do so; I did this last week. Then in 6+ months when lockups expire and insiders have dumped, you can move money back if you'd like.
Also, SpaceX only sold a tiny portion, and Elon is only a trillionaire based on unrealized value of unsold stock. If it crashes before he sells any, he might go back to being a "normal" centi-billionaire.