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Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

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Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#721

Post by f6v »

DanielHB wrote: post #682
saidnooneever wrote: post #456

Earlier quoted context omitted.

i read it as most likely people will lose their retirements if the companies goes bust. is that correct? in my country now they move to new pension model which will allow more aggressive investments with them. i am worried it will just get sent to these bros and i'll work until i die.

I don't know about your country, but in Sweden you can choose where part of your investment money (I think 40%) gets allocated. On top of that you can choose where 100% of your private pensions are allocated. Also some EU pension funds are already in the process of divesting from US markets...

> Also some EU pension funds are already in the process of divesting from US markets...

And where will they go to?

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#722

Post by gitfan86 »

bluGill wrote: post #680
Arn_Thor wrote: post #570

Earlier quoted context omitted.

> 7. Index fund managers are not incentivized to exclude a SpaceX from their indexes. (?) 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 wil…

> Correction: index funds don't have a choice. They must follow the index, and so must buy the stock. 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 la…

The whole point of index funds is that you don't have to pay management fees to managers. It's very expensive to hire a team of people to analyze the entire stock market in detail and chose the best 500 companies, and historically people who did that on average didn't beat the S&P500.

Just look up the performance of Mutual Funds vs S&P500.

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#723

Post by neogodless »

arrty88 wrote: post #605
pryce wrote: post #355

Earlier quoted context omitted.

This should be a 5 alarm fire. It reminds me of nothing more than organized crime rackets that targeted control of union retirement funds

Should one sell their 401ks ahead of the forced buying

In general you should never "sell your 401k." Period. (Short of using it for income during retirement.)

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

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#724

Post by syntaxing »

gitfan86 wrote: post #704
augstein wrote: post #105

For SpaceX (and possible the others): Yes it can, since they changed the rules to force over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations. From https://x.com/Hedgeye/status/2060435253928604065 : "Rule changes for the SpaceX $SPCX IPO: Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5. This forces over $30 trillion in passive 401k a…

This fundamentally misunderstand the point of an index. The fundamental reason S&P 500 exists is to let people buy the entire market ( the top 500 companies make up most of the entire market ). That is it. Period. 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…

This is simply not true and a misrepresentation of the issue. There is no issue with SP500 buying into all these companies. The issue is that “valuation” should be determined by the market before the index funds buy into it hence the original rules and policy in place. Else wise we run into the issue now where our 401K is pumping the IPO, regardless of fundamentals.

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#725

Post by rybosworld »

DanielHB wrote: post #679
rybosworld wrote: post #648

Earlier quoted context omitted.

Definitely not. 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…

I dunno won't index funds be forced to sell other stocks to buy these IPOs? Won't that possibly trigger a market crash if the IPO stocks loses a lot of value very fast after the IPO on top of investors predicting this fact and selling shares of other companies? 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 i…

Yes selling will happen, and in the case of the S&P 500, it will be weighted selling across the whole index.

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.

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#727

Post by mawadev »

jillesvangurp wrote: post #535

Maybe to counter some of the apparently widely expected doom and gloom: - bubbles are notoriously unpredictable and generally don't happen when they are loudly and widely proclaimed to happen any minute now. - large scale infrastructure spending tends to be really good for economies. These three companies are creating lots of jobs that are mostly related to construction, energy infrastructure, hardware spending, etc.…

I have no crystal ball, but I feel uneasy when they change basic rules about indizes right before these IPOs. There are a lot of retirements on the line just by this fact. Maybe big tech gambled too close to the sun and found a way out? Whether something pops or not, it leaves a bad taste in my mouth this can be done so easily, don't you think?

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#728

Post by throwway120385 »

collabs wrote: post #578
ashdksnndck wrote: post #484

Earlier quoted context omitted.

The twitter debt is a negligible portion of the money at stake here. It’s a footnote compared to the trillions of dollars in wealth that are moving around. We are only talking about it because the internet commentariat has special interest in twitter. Not worth wasting time thinking about it if you are deciding how to allocate your portfolio. Nevertheless it is part of a pattern of weird deals in Elon’s companies. He…

Sure, I don't like him either but it shouldn't be about him. It should be about the institutions we trusted to keep our index funds safe. Or was this always based on "vibes"? Was VOO never safe? Was it always possible for the people in charge of the stock market to simply include some money pit into our retirement funds? I feel like the people responsible for these decisions must fear life in prison or this will keep…

This was always the endgame of moving away from managed pensions to 401k's. First you get everyone's retirement income into the stock market, and then you use the stock market to take it all away from them.

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#729

Post by cj »

gitfan86 wrote: post #704
augstein wrote: post #105

For SpaceX (and possible the others): Yes it can, since they changed the rules to force over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations. From https://x.com/Hedgeye/status/2060435253928604065 : "Rule changes for the SpaceX $SPCX IPO: Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5. This forces over $30 trillion in passive 401k a…

This fundamentally misunderstand the point of an index. The fundamental reason S&P 500 exists is to let people buy the entire market ( the top 500 companies make up most of the entire market ). That is it. Period. 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…

> The fundamental reason S&P 500 exists is to let people buy the entire market

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?

Re: Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

#730

Post by [deleted] »

freakynit wrote: post #248
01100011 wrote: post #146

Earlier quoted context omitted.

We don't let bubbles pop anymore. We print money and borrow from the future so that no one loses money on their homes and retirement accounts. The GFC changed the rules.

It looks less like capitalism and more like socialism for the rich, marketed as free markets. 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. Th…

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