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by deadbabe 5 days ago
If you want to play “active investor” and pick and choose what companies you invest in, don’t be surprised when you underperform the whole market.

SpaceX could rise to be a major winner that makes people a lot of money. And then what? You missed out and underperform the whole market.
4 comments
pqtyw 5 days ago
> SpaceX could rise to be a major winner that makes people a lot of money

Based on "sane"/traditional metrics that and much more is already priced in into the IPO valuation.

e.g. Google had a many times lower P/S ratio at their IPO and was actually profitable (and software companies usually have higher valuations than capital intensive ones like SpaceX anyway). SpaceX is already valued at more than Google was 10 years after its IPO while barely making a tiny fraction of its revenue.

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amoss 5 days ago
Alternatively you may want to be a passive investor using the current rules for index inclusion, rather than having them altered to favor this loss-making trashcan on fire.
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soundwave106 5 days ago
Or you could mitigate the next dot-com style crash (which wiped out nearly 80% of the NASDAQ composite).

Back then, it was "day trading" that was one of the warning signs that a bubble was ensuing. There are certainly shades of the day-trading phenomenon in the "r/wallstreetbets" gambling, and wildly overvalued meme stocks like Tesla. And this mad rush to relax the guardrails for what appears to be wildly overvalued IPOs.

Bubbles, and their inevitable collapse, are generally not as big of a problem for younger passive investors, but they can be for older ones. (Hence why I've got a "bond tent", value tilt, and other diversification. I'm at the stage where "underperforming the market" is less of a concern than "mitigation". :) )

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nrclark 5 days ago
OK, but SpaceX is not printing money out of thin air. And neither does the stock market. Somebody will be left holding the bag eventually.
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tasuki 5 days ago
> Somebody will be left holding the bag eventually.

I think so too. I also thought that about Facebook: IPO around 40, swiftly down to 20 - I was laughing about stupid retail getting wrecked. Now it's around 600...

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pqtyw 5 days ago
Maybe you are right, maybe not.. However Facebook as an example seems entirely irrelevant, though? It was valued 15 P/S ratio at IPO and went down to 10 a year after the IPO. You'd have a point if Facebook IPO at $400 instead of $40. But it took it 10 years to reach that.

SpaceX IPO price already has many years of extremely high growth priced in. Comparing it to Facebook's or Google's IPOs is like apples to oranges.

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tasuki 5 days ago
> Maybe you are right, maybe not..

About what precisely?

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deadbabe 4 days ago
Asteroid mining alone could be huge.
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