[whodidntante]

If you do not like Elon, you can simply move your assets to a direct indexing fund, there are plenty of them at reasonable cost, including from the large brokerages.

If you believe SpaceX is overvalued or do not like the way it is being handled by the big index funds, again, use direct indexing.

akademikerpension is pretty decent fund, it is about 50/50 asset allocation, losing out by only .9% per year compare to a US equity/bond portfolio. Better than many active funds:

https://www.finanshus.dk/wp-content/uploads/2023/02/Pensions... https://testfol.io/?s=h8azNZvMICk

You do not like the valuation ? What should a company that launches 98% of the world's non government tonnage to space (80% if you include the Chinese government) be valued at ? The only company that has figured out how to very reliably launch at a sustained and rapid pace ? Pioneered and is perfecting rocket reuseability ? The only thing we can can say with a degree of certainty is that $2T is either very overvalued or very undervalued. If you believe that space will become a huge part of our economy in the future, and believe that SpaceX will play a significant role, $2T is cheap. Dirt cheap. The only way to prosper is to be bold.

For all those who come here to say that they do not like Elon or that the valuation is ridiculous, or that SpaceX will not succeed, that is perfectly fine - you are just a few clicks away from making it happen. Sell your assets and buy a direct indexing product, simply buy the stocks you want, buy ex-US, or any other number of options you can do on your phone with a few clicks. Less clicks than it takes to virtue signal on this forum.

[ajmurmann]

"What should a company that launches 98% of the world's non government tonnage to space (80% if you include the Chinese government) be valued at ?"

The TAM of that is under $10 billion. So even owning that entire market shouldn't get you anywhere near a trillion. Then factor in the development cost of starship which has been going on forever and still hasn't even made it to orbit.

Even the IPO filing isn't claiming the value comes from the rockets but from data centers in space which seems questionable. The real cash cow right now is Starlink but they aren't leaning into that heavily because those numbers also indicate that revenue growth might be stalling out.

If you just look at the pure numbers the case is very weak. No reason to change the inclusion rules. In fact I'd argue they never should change the inclusion rules. Let the market find a price first. Index funds are supposed to be boring and track the market. Including any recent IPO just adds chaos beyond simply tracking the overall market. It's trivial to buy some SpaceX if one wants and unlike selling your entire fund holding either doesn't trigger a taxable event at all or it's a much smaller one if you cannot avoid it.

[whodidntante]

I am not looking at the "pure" numbers, and many investors do not, they look at potential. They look at what the possibilities are. If you believe that space will be a significant part of the economy in 20 years, and that SpaceX will be a large participant, the current numbers do not mean a lot, this is not a large established company in a static industry. In 20 years the market cap of just the US could very well be $200T, if space is only 10% of that, there is $20T of valuation for space, and that is just US.

Google when it ipo'd about 20 years ago had a market cap of $23B. It is now close to $5T. Even if it went over 10x overvalued at $230B when it ipo'd, it would still have been a good investment. That is because the internet became a large part of our economy, and Google is a major player.

If you really want to compare the two, Google had a market cap/revenue of $2B/$2.7B, SpaceX is currently $1.8T/$20B, or about 10x the ratio of Google back then.

Yeah, very pricey. Crazy ? Not sure. Do I like the valuation ? No. Would I buy more SpaceX than what will be in my equity ETF ? No. But I am not unhappy that I will own a piece when it comes out. Do I like the change in rules ? Absolutely not, but that is just the way it is. The market, over time, is, and always be a lot smarter than I am.

[ajmurmann]

Your TAM for "space" growing in 20 years from $3 billion to 20T honestly seems like quite the stretch. Starship has been in development for about 10 years and it's still not even been to orbit. I have a hard time seeing that sector grow by a factor of 6,666X in 20 years. It's not been growing anywhere near that despite SpaceX's incredible innovations and price reductions.

[Eridrus]

"Just" is doing a lot of work here.

Many people have appreciated gains locked into their indexing products such that changing is very expensive.

The biggest issue is not SpaceX/Elon per se, but indexes bending over backwards for him and changing their indexing rules to fleece index investors.

Most IPOs perform badly, to the point where the SP500 excludes all of them for a year, and I think that is actually appropriate for an indexing product. Though they're looking to change that and their float weighting for Elon.

Though after doing some digging I am not personally meaningfully impacted since Vanguard uses CRSP, which is float weighted, so only 0.1% of that is going to be SpaceX and I can live with that.

I short the stock on the actual financials if I was exposed to it (and it was actually possible), but it's a small float and there are apparently tonnes of Elon fanboys propping up Tesla beyond belief already so I expect this to be one of the hardest to predict stocks/IPOs.

[whodidntante]

I agree that the rule changes are bad and ill intentioned, but I am not sure what I can do about it. And, even if it was zero cost for me to move to an ETF without SpaceX, I would not do it. The market does what the market does, that is what I signed up for, it is a lot smarter than I am. It is not worth changing that for an insult to what will be a few percent of my portfolio. Even if SpaceX drops to 1/2 of its IPO, it will be like having a typical down day, and it will recover. I do want a piece of SpaceX, I just wish it would be at a better price.

As far as the appreciated gains go, I agree with you. However, there is a strong correlation between someones wealth and how much they have in taxable. For most people, especially those that are not wealthy, their equity investments are heavily weighted to retirement accounts,so I look at this as more a rich persons proble.

[Eridrus]

I think the thing to do here for those exposed to this nonsense (QQQ, SP500 holders) is to make noise to their index provider that you don't want them changing the rules to please Elon.

[wewtyflakes]

That strategy would be a taxable event.

[whodidntante]

There is a high correlation between wealth and taxable accounts. For those that are not well off to have large taxable accounts and have most of their assets in retirement funds, this should not be an issue.

[wewtyflakes]

Pile on enough assumptions and qualifiers and then suddenly everything is so easy