[epistasis]

I'm usually a Boglehead, with some exceptions, and one exception I'd love is some sort of trade that would eliminate my exposure to SpaceX for the next few years. I'm sure there's some combo of options that would do it.

Probably finding an ESG-focused ETF would do it. ESG basically meant "good governance, we follow laws" which translated into better governed public companies that therefore had better returns, as one would expect. Really weird how it was politicized into something entirely different...

[bryanlarsen]

There's an ETF for everything out there. (There are more ETF's than stocks). There'll be a large market for "S&P500 without SpaceX" et al, so it's seems likely somebody will fill it. It probably will have to use a worse name because of the S&P trademark.

P.S. Here's an example of S&P500 without the magnificent 7 https://www.defianceetfs.com/xmag/

[addandsubtract]

A&W 500 (because it only lists companies A-W)

[Galanwe]

> I'd love is some sort of trade that would eliminate my exposure to SpaceX

You can just short SpaceX of an amount equivalent to its share of your SP500 holdings. You will have to pay borrowing costs though, but on something that liquid it will be very small.

[BJones12]

Yeah. For comparison, SpaceX will be maybe half the size of MSFT. MSFT is 7.4% of the SP500 index, so for a $1,000,000 portfolio if you were to short MSFT you'd pay 0.25% on the value of that 7.4%, or $185/year.

So eliminating SpaceX exposure will cost you $100 per million of your SP500 ETF per year, or so.

[parliament32]

Shorts have unlimited risk. Buying a put is risk-defined and probably a better strategy.

[BJones12]

No, because the unlimited risk of shorting is balanced (hedged) by the unlimited upside of holding the same number of shares via the ETF.

[jocaal]

You cannot however sell only SpaceX shares from your ETF to cover your short's losses. So due to liquidity issues I wouldn't recommend your strategy.

[ls612]

We aren’t talking about penny stocks we are talking about a tech giant. At the scales that any ordinary investor is operating at there will be no liquidity issues with shorting it and if it is in your index fund the short and long positions will directly offset if you size it correctly leading you to have net zero exposure to SpaceX.

[Galanwe]

What are you talking about? You don't need to touch anything about your ETF. You just have to short a single name on the side.

Also there is no liquidity issue, we're talking SP500 names here, you'll pay GC, which should be around 25bps as the other comment mentions.

[BobaFloutist]

They're saying if the stock goes up and you get margin-called on the short, you have to sell index shares, you can't just annihilate the Tesla shares with the anti-Tesla shares and walk away.

[parliament32]

Yeah you're not wrong. I didn't think about it that way because you can't really break something out of an ETF basket, and you also don't control the ETF basket, but if you think those risks are minimal it's probably fine to just compare dollars-to-dollars.

Personally I would still probably go with the long put strategy unless the price difference is exorbitant.

[Galanwe]

> also don't control the ETF basket

The ETF is this case follows the index, so there's really no surprise.

> I would still probably go with the long put strategy

Just, don't. There is a world of complexity between a simple short, and entering an option contract with non linear pnl.

[parliament32]

The ETF that seemingly arbitrarily changes its rules? In such a short time frame too? This change is going proposal to implementation in.. what, two weeks total? I don't know about you but I don't keep up on this stuff unless it hits the news like this one.

You are not entering a contract with a long put. You are buying a contract that, if you want, you can just let expire with no obligation to do anything. It's effectively simple insurance (as opposed to a short position, which is an actual liability, which will eat you alive in exceptional circumstances).

[Galanwe]

It's not just a short, it's a portfolio of X short + X long. It's effectively canceling perfectly.

[parliament32]

> some sort of trade that would eliminate my exposure to SpaceX

I think it's less complicated than you'd think.. just buy LEAPS puts proportional to your exposure.

[daft_pink]

LEAPS are very expensive.

[parliament32]

Because they're long-term, yes. It'll really come down to how much you're willing to pay for monthly Elon-shenanigans-insurance.

I'm very interested in seeing how the market prices these options after the IPO.

[joelthelion]

I've sold all my stocks. My reasoning is that if AI stocks go bust, they will take the global stock market with them.

[xenospn]

Stock markets are ruled by hype and fomo. Good corporate governance has little to do with returns, unfortunately.

[epistasis]

Short term gains are hype and fomo, but if you're holding index funds long like I am, then returns have a lot more to do with performance. And given the lack of hype around ESG, it seems like an exceptional time to buy in to it.

[wolvoleo]

That's also the kind of thing that pension funds should be investing in. They shouldn't invest in hypes as they're by definition in for the long haul and eventually hypes always blow.

Sure you can make a lot of money but only if you know when to get out before the crash. And that's something that doesn't gel well with long term investment.

[JumpinJack_Cash]

Bro the index is about riding the hype and fomo and when the phenomenon progressively loses track it gets less and less quota

[epistasis]

I don't understand the lingo in your comment but my best possible guess is that I disagree vehemently with it.

Long term dollar cost averaging is not about hype and fomo. Overall pricing in equities does vary according to alternative investment routes, which is why I'm diversified into those as well.

Stonks go up. Stonks go down. Averaging over decades, ownership is about owning a share of productive output of a large portion of our entire economy, an amazing restructuring of social relations that presents an amazing opportunity for the common person, unseen throughout the history of humanity.

[jakub_g]

One annoying thing is that those "non-standard" ETF variants have much higher management costs than basic S&P500 / All World ETFs.

[nothercastle]

Dimension funds aren’t bad