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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?

#951

Post by [deleted] »

gman83 wrote: post #483
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 seems like straight up fraud? Presumably all to bail out early investors?

[deleted]

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

#952

Post by sigmoid10 »

gitfan86 wrote: post #898
sigmoid10 wrote: post #716

Earlier quoted context omitted.

This disregards the fundamental reason why people buy index funds in the first place. Rules for consistent GAAP profitability and cooldown periods specifically prevent retail investors from being exposed to particular malicious stock market tactics and overall risks that otherwise could significantly hurt them in the short term. So it's more like saying "you don't like extra risk? too bad."

Yes, if someone thinks that the top 500 companies include too much risk then yes too bad, you need to move out of SPY. 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…

It's not about the overall long term risk of the company, it's the inherent short term risk of the IPO that will potentially hurt retail investors. Why not have them trade for a while and go to business as usual so things settle down and the index can prevent wild fluctuations? The only ones who might benefit from this rule change are pump-and-dump types.

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

#953

Post by siren2026 »

gitfan86 wrote: post #898
sigmoid10 wrote: post #716

Earlier quoted context omitted.

This disregards the fundamental reason why people buy index funds in the first place. Rules for consistent GAAP profitability and cooldown periods specifically prevent retail investors from being exposed to particular malicious stock market tactics and overall risks that otherwise could significantly hurt them in the short term. So it's more like saying "you don't like extra risk? too bad."

Yes, if someone thinks that the top 500 companies include too much risk then yes too bad, you need to move out of SPY. 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…

You are talking nonsense.

The reason why I liked the SP500 is especially BECAUSE they had guardrails against unprofitable speculative companies that just got added on the stock market. On average those stocks are going down on their first public year. The SP500 made sure to have a cooldown period before adding them.

Now you are trying to justify why we should have them anyways, even though I never chose that to start with.

The issue everyone is having is the rule changes to add them in a couple trading days. How can you defend that?

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

#954

Post by GPerson »

giancarlostoro wrote: post #119
ravenstine wrote: post #90

All these things are apparently valued at trillions of dollars these days. Where's the trillions, or hundreds of billions worth in improved quality of life? What has gotten better other than the ability to produce more crap?

In terms of SpaceX (the space portion of it) they've produced the cheapest way to get any payload into space. If you pay anybody else, you will overpay drastically depending on who you want to take your payload into space. In terms of AI, we've seen even here on HN everything from mathematical problems that remaind unsolved, being solved, mathematical proofs being used to disprove theories, heck we even learned more…

That proof has almost no significance because the average mathematician cannot spend 2 million dollars on inference.

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

#955

Post by [deleted] »

nelox wrote: post #270
Xunjin wrote: post #115

Earlier quoted context omitted.

If this is a bubble... The pop stage will be devastating...

Listen to the author of “A Brief History of Financial Bubbles” argue why it probably isn’t a bubble: 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...

[deleted]

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

#956

Post by HereBeBeasties »

gizajob wrote: post #639
hagbarth wrote: post #403

Earlier quoted context omitted.

Because 5 days is not enough for the market to discover the price of SpaceX. And the rules were changed so the float is weighted as if it was much much larger than it is.

Are you sure? It discovers it within seconds following a bad earnings report. It seems hard to know right now whether five days might actually be sufficient or not, seeing as the cat is out of the bag about how unprofitable and debt laden this trillion dollar enterprise is.

No, it's not long enough. You need long enough for the initial investors to get past their lock-up period and either sell their shares, or not, which is typically 90-180 days. Otherwise, index fund investors will pick this up at basically peak overvalued initial pricing, only to potentially take a bath on it three months later.

Additionally with SpaceX they are issuing only a very small percentage of stock compared to a usual IPO, with an unprecedented valuation. Couple that with a much larger than usual amount of the IPO being issued through retail investment platforms rather than to professional institutions (30% rather than a more typical 5%) and it looks pretty unsettling.

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

#957

Post by siren2026 »

riffraff wrote: post #359
OccamsMirror wrote: post #322

Earlier quoted context omitted.

Can you please summarize his argument?

The argument is, as I understand it: * 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 dema…

* Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings

Based on earnings that mainly include all the circular tricks to generate business with each other. How much is really left once you remove all of those?

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

#958

Post by MichaelDickens »

chii wrote: post #436
FriedPickles wrote: post #384

Earlier quoted context omitted.

The money still comes from somewhere. In this case, those index funds will be forced to trim holdings of other companies. So it's cannibalizing other parts of the stock market.

which, if true, would make an arbitrage opportunity for a fund that explicitly excludes these high valuation targets but buys those trimmed companies (because for trimming to have happened, they must've been sold unwillingly and thus must be under-priced).

There is an entire segment of mutual funds and ETFs that avoid stocks with high valuations, called value funds. About half my equities are in value funds.

The downside is that it's not an arbitrage. Sometimes they perform worse than the broad market. A lot of times, in fact.

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

#959

Post by goosejuice »

me551ah wrote: post #692

None of these companies have any MOAT. LLMs are getting better at a rapid pace and in a year or two, Chinese LLMs should easily catch up with the best of the models. Models have kind of reached a saturation point and that’s why OpenAI and Anthropic are doing an IPO now. Because a year down the line when their lead diminishes even more, they would be worth lesser money. SpaceX has clients to put payloads into space, b…

If spacex doesn't have a moat, that phrase has lost all meaning. Surely that must be a joke. Do you want to make that argument?

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

#960

Post by rrrrrrrrrrrryan »

eru wrote: post #561
energy123 wrote: post #465

Earlier quoted context omitted.

You protect yourself by understanding that this is one infinitesimally small cost (expressed as a fraction of your portfolio returns) that doesn't overcome the benefits of maximum diversification and the ultra-low fees of broad-based ETFs. 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%,…

I broadly agree. Though I'm less pessimistic: lots of people will pay lots of attention to SpaceX and friends, and with short selling in public markets being possible, an accurate price will be established very quickly. 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.

> with short selling in public markets being possible, an accurate price will be established very quickly

It'll be virtually impossible to short sell the stock within the first month due to lockups, and it'll take 180 days for all the pools to be available: then, we'll have a more-or-less "accurate" price, as you put it.

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