[iso1631]

Not just that.

If you have a $10B fund which owns things evenly across the nasdaq, and a new company arrives, you have to buy shares in the new company, which means selling existing shares or getting more funding to balance.

So you buy $1B of SpaceX stock at the IPO price, meaning you have to sell 10% or $1B of existing Nasdaq stock, which (when combined with every other fund) lowers the cost of the other stocks.

If I own stock in everything-but-spacex, then I'm seeing the price collapse because everyone else is selling.

Then if spacex stock collapses to half its initial price, your $1B becomes worth $500m, you get margin called, and you have to sell more stock, pushing the other stocks down, and the problem cascades

[bpt3]

Maybe if you use the word collapse a few more times in your contrived and completely unrealistic example, it'll actually have some merit!