The exit-liquidity framing lands, and the float makes it sharper. SpaceX is floating only 3 to 4% of its shares, so the public is being handed the thinnest possible slice at the very top of the curve. Worth adding the other side too: the index gatekeepers actually agree the timing is rich, S&P just refused to fast-track any of the three on profitability grounds. I wrote up both reads, bull and bear, without picking a side, if useful:
Great Article- Necessarily long but a must and timely. This knowledge ought be there provided and pushed by the Financial Media. but I am asking too much. So glad you did a well deserved service in common language that one can understand and appreciate its prfound significance. Keep it up. I do admire some of your perspectives
Absolutely the truth…….every “pundit” I listen to says don’t bet the farm, and keep gold, silver and cash on hand. The stock market use to be somewhat fun, when it had under 100 important stocks. Now it is just a mishmash of index funds,…. with everybody and their brother jumping on these AI promises. Thanks for your opinion, Lau!
Thanks, Lauran. I think you're right… the market has become a passive-indexing machine where nobody knows what they actually own. Momentum-chasing with extra steps, basically. And it can be abused, as the SpaceX example clearly shows. And you can’t even talk about the benefit of diversification these days with the Magnificent 7 and all.
Thank you for your very thoughtful article. One clarification: “In December 2020, Tesla was added to the S&P 500, at the time the largest company ever brought into the index, and only after a run-up of more than 70% on the announcement.” By largest company you mean by market cap correct? I don’t think by revenue or employment. Second thing, and I know you can’t give specific advice but it seems like the index funds even without spacex are set to underperform anyway, so should one consider funds or ETFs that DON’T track the major indexes but are nevertheless diversified? I really need to look at all of my funds and see what is in the sausage 😁. Have a good day
so, the answer is to short the stock, or perhaps even better buy put options with a year expiration. All the risk up front, potential for huge gains half way into the contracts as the stock price plummets.
Perhaps too simplistic, if what you think is correct, that index funds will be forced to supply fiat. This is why I never invest in index funds.
Thanks, Thomas. The obvious problem with shorting, and especially with puts, is that you have to be right and right on time. A year sounds like a long runway, but time decay eats the premium every single day whether you're right or not. You can have the thesis exactly right and still lose money because the market took 14 months instead of 12 to agree with you.
I think I’m going to make some money on the $140 puts. No time decay yet, but the nice 15% drop today really made these contracts valuable.
Do are of course correct - being right and right on time is critical. When buying options, ensure that time decay is far out into the future. Not foolproof, but you get a double or triple occasionally.
Phenomenal article- this is the type of stuff the Main Street media is SUPPOSED to report. Thank you for what you do. I never miss a Lau Article
Thank you, Josh. That means a lot.
If your company allows it, going self-directed on your 401(k) is the only way to avoid this garbage.
The exit-liquidity framing lands, and the float makes it sharper. SpaceX is floating only 3 to 4% of its shares, so the public is being handed the thinnest possible slice at the very top of the curve. Worth adding the other side too: the index gatekeepers actually agree the timing is rich, S&P just refused to fast-track any of the three on profitability grounds. I wrote up both reads, bull and bear, without picking a side, if useful:
Great Article- Necessarily long but a must and timely. This knowledge ought be there provided and pushed by the Financial Media. but I am asking too much. So glad you did a well deserved service in common language that one can understand and appreciate its prfound significance. Keep it up. I do admire some of your perspectives
Glad you liked it, Baku. Thanks for the kind words too.
Excellent explanation Lau. I will pass this post on to many.
Thank you, Kimberly. I appreciate that! 😊
Absolutely the truth…….every “pundit” I listen to says don’t bet the farm, and keep gold, silver and cash on hand. The stock market use to be somewhat fun, when it had under 100 important stocks. Now it is just a mishmash of index funds,…. with everybody and their brother jumping on these AI promises. Thanks for your opinion, Lau!
Thanks, Lauran. I think you're right… the market has become a passive-indexing machine where nobody knows what they actually own. Momentum-chasing with extra steps, basically. And it can be abused, as the SpaceX example clearly shows. And you can’t even talk about the benefit of diversification these days with the Magnificent 7 and all.
You probably know Mike Green, he has been writing about passive and its potential issues for a while.
Important points all thru, and warnings.
Thanks God Im in Crypto
Thank you for your very thoughtful article. One clarification: “In December 2020, Tesla was added to the S&P 500, at the time the largest company ever brought into the index, and only after a run-up of more than 70% on the announcement.” By largest company you mean by market cap correct? I don’t think by revenue or employment. Second thing, and I know you can’t give specific advice but it seems like the index funds even without spacex are set to underperform anyway, so should one consider funds or ETFs that DON’T track the major indexes but are nevertheless diversified? I really need to look at all of my funds and see what is in the sausage 😁. Have a good day
so, the answer is to short the stock, or perhaps even better buy put options with a year expiration. All the risk up front, potential for huge gains half way into the contracts as the stock price plummets.
Perhaps too simplistic, if what you think is correct, that index funds will be forced to supply fiat. This is why I never invest in index funds.
Thanks, Thomas. The obvious problem with shorting, and especially with puts, is that you have to be right and right on time. A year sounds like a long runway, but time decay eats the premium every single day whether you're right or not. You can have the thesis exactly right and still lose money because the market took 14 months instead of 12 to agree with you.
I think I’m going to make some money on the $140 puts. No time decay yet, but the nice 15% drop today really made these contracts valuable.
Do are of course correct - being right and right on time is critical. When buying options, ensure that time decay is far out into the future. Not foolproof, but you get a double or triple occasionally.
Robbing the poor as usual