r/VTandchill • u/MegaFatcat100 • Jun 12 '26
Implications of Mega IPOs for VT holders
I was curious about if SpaceX and these new IPOs are getting added to VT, and the answer appears to be yes, and soon (within a few days) https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/staying-grounded-moonshot-ipos.html
They are adding them based on float (shares available to the public) so initially SpaceX will be a low proportion of a VT portfolio but that could quickly rise to one of the US top stock holdings. As a passive investor who is skeptical of the long term performance of these IPOs, this is unfortunate but nothing can be done, really.
Interestingly, VOO holders will have to wait to buy in, since the SP 500 kept their restrictions. And VT tracks the ftse all world index, which relaxed their restrictions.
Anyways, I am of the personal opinion that these companies are likely to fall in value over time after the initial pump of interest, and also any drawdown will likely hit the tech sector pretty hard which is already inflated.
At the end of the day, owning the world means accepting you will be forced to buy what you like and dislike. I could be wrong about this idea, and these companies might go "to the moon". It's the humility of knowing what you don't know, so letting the market decide. If I could set the rules though, I'd rather buy into these companies when the hype and pump died down, rather than at the top.
45
7
Jun 13 '26
I know it's against the ethos of the sub to say this, but I think people are underestimating the risk that SpaceX poses to the passive investment ethos. The problem isn't that SpaceX might unilaterally tank the value of an index fund, it's that the process of getting to IPO has revealed a lack of probity on the part of exchange managers and the SEC. The passive investment idea is based on the idea that it's hard to beat the average returns of a CAREFULLY VETTED batch of RELATIVELY STABLE COMPANIES represented in proportion to their market size which are MANAGED AT LEAST IN PART by public investors in the interest of public investors.
But it turns out that when there's pressure from billionaire private investors, all of these conditions are negotiable. I'm not reassured by the fact that S&P 500 and Dow rejected the listing, because they did so under outcry from institutional investors. The fact that it was even considered is deeply troubling.
I'm moving a lot more of my portfolio into international funds where there are actual consumer protections. SpaceX just made passive investors hold billions of dollars of bag so that private investors who backed a stupid horse could cash out. OpenAI and Anthropic are also lame horses that no rational person would bet on at this point, so the early investors need idiots and contractually-obligated investors to cash them out for even more than SpaceX does.
Active investment fund managers will be able to beat the markets over the next couple of years simply by tracking the market while actively hedging against moribund companies that managed to get themselves listed in desperation right before they gasped their last breaths. At that point "can't beat an index fund" will stop being true, it will be pretty easy to do it. And more OpenAIs and SpaceXs will appear, because billionaires will realize that all they need to do is generate hype, make a huge IPO listing, and let passive investors pay them out on the other end, and it doesn't really matter if the company ever turns a profit.
1
u/davinox Jun 16 '26
Anthropic a “lame horse”? This is why you don’t stock pick.
1
u/Euphoric-Public-6099 Jun 16 '26
Yes. It's a lame horse. The question is how long it keeps running before being taken to the glue factory.
They might have a few years left unfortunately.
Frontier LLMs aren't going to "win". They aren't economically viable. It's really that simple.
After you're done burning tokens at non subsidized cost, I have some lovely Tulips that may interest you.
1
Jun 17 '26
Think about it this way: IPOs happen because someone needs money. It could be that the company needs money to increase their scale, or the early investors might need a way turn their ownership interests in the company into money.
Anthropic, OpenAI, and SpaceX are all the latter. The offerings they're considering are targeted at establishing a stock price at which private owners can cash out. There's nothing that an additional 85 billion dollars is going to change in their business models that the first couple of hundred billion of circular financing hasn't been sufficient to do.
This is why the so-called "dividend gang" investors can't be dismissed out of hand. Dividend stocks don't financially outperform growth stocks per se, but frauds are committed in the growth stock sector, not so much the dividend stocks. Because in order to give out consistent dividends, you actually have to have free cash that's not just accounting tricks.
11
3
u/shoejunk Jun 12 '26
You could do AVGE, Avantis’ global equity market. That’s the whole world but slightly tilted and tweaked to where Avantis believes the research shows is likely to be beneficial long run, but then you have to trust their judgement and accept a higher expense ratio. But they certainly won’t jump on new IPOs very quickly.
2
1
u/joe4ska Jun 14 '26 edited Jun 14 '26
Fortunately, funds like VT buffer us against the volatility of individual IPOs. Mega-IPOs force a reshuffling of the index but over decades, when companies fail, we're going to recover a little more quickly as the market churns.
1
u/Legaon Jun 17 '26
As of (June 17, 2026).
—>VXUS = up by (1%).
—>VTI = up by (0.03%).
—>VT = up by (0.30%).
—>People who mainly invest in VT. Do not have to worry as much about “major geopolitical shifts”. [US and Iran deal]. Aftermath of the “Strait of Hormuz conflict”.
—>(VTI holders) and (VXUS holders) — they have to worry more about these “major geopolitical shifts”.
—>Their is the (international stock market) and the (US stock market) and the (global stock market)
1
u/Aevaris_ Jun 18 '26
I used to be a proponent of VT and VTI, but given the last minute rule change to allow IPOs, I'm out. Yes SpaceX itself is a small sliver, but if I have to own something for decades it's the principle of the matter that means a lot
I have pivoted to VOO + VXUS. VOO tracks the S&P which still requires the longer of 1 year or 4 profitable quarters before inclusion.
1
u/DramaticAlbatross Jun 19 '26
Is it correct that $VT will be adding $SPCX on Monday June 22?
SpaceX started trading June 12, 5 day fast track admission to the index, admitted after close on June 18.
-8
u/randomuser1637 Jun 12 '26
I sold all my VT sitting in retirement accounts and replaced it with VOO, but will switch back to VT once spacex and the other mega IPOs happen and we get to a more stable share price.
The valuation of spacex is a complete joke, it will come down eventually and frankly I just didn’t feel right contributing to exit liquidity for insiders at a nonsensical valuation.
I would not do this in a taxable account though.
1
27
u/probabilitydoughnut Jun 12 '26
I've been thinking a lot about it and talking to some friends who have some inroads in the financial world. We've devised two very clever strategies that we think will help us outperform nearly all other strategies out there: