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Here's what this means for SpaceX for those of you uninitiated in bond-math: 1. SpaceX issued long-term bonds whose coupon (ie, "interest rate") was 6.5%. 2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387% (if the price of a bond goes down , but the coupon stays the same, the yield goes up ). 3.…
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The beauty of capitalism is you have a choice. There are already ETFs that exclude SpaceX/Elon's company's for those who so desire. See QQNE and SPNE.
In practice the choices tend to be limited for a lot of the people for whom this rule change was meant to ensnare their money because it exists within 401k plans with limited portfolio options.
The real question is why are employers able to limit employee 401k investment choices and employee health insurance. This is not freedom.
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The term "capitalism" was literally only created for the purpose of writing criticisms of the (then) current system of markets/trading/taxing/investing. Try actually defining capitalism in a way that doesn't apply to basically any random society since the dawn of agriculture. Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society…
Saw an interesting discussion on how capitalism has existed for as long as markets have existed, including ancient Greece, and how it inevitably leads to wealth inequality, monopolistic behavior, unsustainable resource extraction, and all the other negatives we see today. The only difference is that in Greece, all of these negatives would have been applied locally but now they're all being applied globally. Instead o…
The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100. The index fast-tracked SpaceX stock for inclusion 15 days after the IPO, instead of the normal three-month seasoning period. They also changed its 10% minimum float rule to a 3x weighting boost for low-float stockss. So many people will unwillingly and prematurely invest into SpaceX, before it has any chance to discover its re…
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Idk, I kinda agree with Matt Levine. The purpose of these ETFs is conceptually to track the "largest X companies", so including SPCX is just staying true to that. If there's an issue I think it's earlier in the IPO pipeline.
But if SpaceX valuation drops by 2/3 before settling into a steady state, does that not mean that SpaceX is not one of the "largest X companies" but rather was overvalued? The entire reason for these seasoning periods is to give the market time to determine what the company is actually worth to the market itself. Bypassing those rules to get it in earlier says to me that they don't believe it will settle at a price n…
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Of course. But you have a bond buyer who can put their thumb on the scale, and has shown willingness to do so. That buyer also tried to interfere in (succeeded in interfering in) the business of law firms that worked for anti-Trump causes, has directly interfered in the renewable energy market to benefit its backers, etc. What is to say that SpaceX and Oracle won't get these benefits? (Government buying bonds, trashi…
Nobody doubts all this. What the bond market is saying is that even with all of that, there are plenty of viable scenarios where bond holders aren't paid back. After all, if you truly believe what you say with conviction, the sensible thing to do would be to buy up as many SpaceX bonds as you can if you think they're so undervalued.
Here's what this means for SpaceX for those of you uninitiated in bond-math: 1. SpaceX issued long-term bonds whose coupon (ie, "interest rate") was 6.5%. 2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387% (if the price of a bond goes down , but the coupon stays the same, the yield goes up ). 3.…
> 2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387% That's your return if you buy one of those bonds and the bond is paid on schedule. Presumably the market consensus is there's some risk that payment may arrive late or not at all since the yield to maturity has increased since issuance and not…
For a spread of 300 basis points that's still a very low probability, probably under 5%.
Earlier quoted context omitted.
Of course. But you have a bond buyer who can put their thumb on the scale, and has shown willingness to do so. That buyer also tried to interfere in (succeeded in interfering in) the business of law firms that worked for anti-Trump causes, has directly interfered in the renewable energy market to benefit its backers, etc. What is to say that SpaceX and Oracle won't get these benefits? (Government buying bonds, trashi…
Nobody doubts all this. What the bond market is saying is that even with all of that, there are plenty of viable scenarios where bond holders aren't paid back. After all, if you truly believe what you say with conviction, the sensible thing to do would be to buy up as many SpaceX bonds as you can if you think they're so undervalued.
The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100. The index fast-tracked SpaceX stock for inclusion 15 days after the IPO, instead of the normal three-month seasoning period. They also changed its 10% minimum float rule to a 3x weighting boost for low-float stockss. So many people will unwillingly and prematurely invest into SpaceX, before it has any chance to discover its re…
So, the inclusion rules are basically "these are the hard limits that specify which stocks are eligible, unless someone really big and lucrative comes along, in which case it's whatever and we'll just adjust the rules to make them eligible"?