I have AkademikerPension as my pension fund through work and this move suits me quite well. They've already excluded Tesla as well as a variety of companies that profit of weapon production, fossil fuel production or are suspected for human rights violations.
In Norway the oil fund are actively arguing against boycotting these kinds of companies saying, and I paraphrase: "but our job is to earn money and we can't do that if you hippies keep standing in the way with your morals"
For some context, this Norwegian cartoon by a group that used to make satire for the government run news agency is a pretty decent summary of how things were discussed: https://www.youtube.com/watch?v=9mkuP6kQwNs.
The old man is a caricature of Jens Stoltenberg (who seems to be running the Norwegian economic machine rather well nowadays, controversial or not)
I don't know the AUM of this pension fund but if the managers were doing their jobs they should have had at least a tiny bit of exposure to SpaceX years ago.
The sovereign fund of Norway also researches a lot of the state of the companies and then invests into the whole market vs the ones they dont consider good according to some metric. Sounds like this Danish example.
Pensioners should get the same amount regardless of investments, as long as there is enough funding, which it seems there is for the moment.
Of course, if someone wants to risk their own money, they can invest in whatever they want. They can even sell their pension for a cash lump sum and invest that.
It's maddening how quickly ESG and similar programmes have been thrown in the dumpster once the political climate in the US swung back to "anti-woke".
> "but our job is to earn money and we can't do that if you hippies keep standing in the way with your morals"
What these clowns conveniently forget is that their job is not just "to make money" but to make money over a span of decades and centuries in the case of the sovereign funds. A long term investment fund that optimizes for the next quarter at the expense of the long term is a bad fund.
And so the ESG and woke "hippie bullshit" is nothing more than the basic capitalism of maximizing your gains by 2100 by not destroying the one planet all your companies are on.
Long term funds do not have the luxury of being passive owners. If they take no role in management, that role will instead by taken by whatever short-term owner walks in next. They don't care about the value by 2100, they just want the company to tear the copper out of it's own walls so they can sell with a profit by next quarter, retail even sooner.
How is Tesla destroying the planet? In my mind, Tesla is one of the most important companies in transition to clean energy. Yet it got dropped from the S&P ESG index.
ESG is just another phony way for someone to manipulate stock prices, because it's decided by some committee with arbitrary and opaque ways. And that's why no one takes it seriously any more.
That’s exactly what you would want your money manager to say. It’s their job to turn a profit.
In turn you also want democratically elected politicians above that saying “yes, but the people want their money made ethically, so you can’t do that”.
> That’s exactly what you would want your money manager to say. It’s their job to turn a profit.
The job of the police is arresting people who break the law, but similarly to your money manager, you really don't want them to do this regardless of anything else, there is more things to consider than just "do everything you can to arrest people", and hopefully the same for your money manager. But also, I might be too European to understand the true value of "money grow regardless of society cost at large".
The point is that it's the job of the democratic legislature to codify what you just stated here into law, so that all money managers have to abide by this standard, not just those that have a personal conviction for it. That's the essence of rule of law.
The fossil fuel part doesn't seem like a rational decision to me.
Why are we pretending that fossil fuels dont provide an immense amount of value for humanity, and that its horrible to invest or support building out any fossil fuel production whatsoever.
Lets not do produce it ourselves, lets just instead outsource it to the gulfs and Russia…
Nobody is pretending fossil fuels are not producing value, if they did not nobody would bother using them in the first place. The argument is about the fact that they produce relatively short term value for the person using them, at the externalized expense of polluting the atmosphere and causing long-term environmental instability and destruction for every subsequent generation for the foreseeable future. Coastal regions (and whole islands like the Maldives) disapppearing under the ocean is immense and ongoing value loss for humanity. Ocean acidification destroying marine ecosystems is an immense and ongoing value loss for humanity. More frequent and more extreme hurricanes is an an immense and ongoing value loss for humanity. And on and on...
I think a lot of people actually dont realize the value it gives humanity. Lots of people think we would have been better of in an alternate universe where we never discovered oil & gas.
How is this short therm value for people using them? They are drivers of the most fundamental stuff in our day to day lives. Either enabling billions of people cheap efficient transport, efficient agriculture producing cheap food, cheap and efficient global shipping of goods, a great portable and ajustable source of electricity.
I think as of now its a question on how much you are willing to sacrifice human welfare over preserving current nature/environment. Extreme weather has largely been solved for humans, the trend is still less death and starvation caused by extreme weather, we are immensely adaptable and resilient.
Im not sure our current pace of reducing emissions is that horrible. There are reasons to why it takes time. I might be too optimistic, but I think we will largely solve human issues. Nature as you point out, im worried about, although I know less about. And its hard to quantify what the value is for us.
If oil and gas would not exist, then liquid fuel would be produced from coal. With the latest processes the cost of production is like 80 dollars per barrel, but with processes that Germans developed during WWII it was probably like twice of that in modern money.
In alternative universe that would be cheaper due to massive scale, but the era of very cheap liquid fuel would never happen. So electrical cars on big scale will happen much earlier. And given that coal is much more evenly distributed on Earth, one can speculate that there would be much less reasons for conflicts.
I dont think this makes sense, given how insanely much more polluting coal is. You have to burn massive amounts of coal to power the liquid refinery, 50% of the energy lost essentially in the conversion process. In addition to that liquid coal has double the emissions of regular oil. Air quality would have been a disaster.
EVs in scale would have maybe happened sooner, but they would have give us much less value, and I think in the end reaching current EV tech would most likely have taken longer than it did with oil and gas, just due to industrialization and technological innovation would progress much slower without oil and gas...
I think advanced green tech in general would have taken much longer time to develop also on an industrial scale when limited by coal only. Not to speak of human welfare would also have improved much slower.
What do you mean would have been? It was a disaster. Perhaps you are too young or insufficiently well travelled to have experienced the effects of burning coal in, say the UK in the 1950s and 1960s or in China even in the last few decades.
Without oil the push to solar and wind would also have been accelerated, probably.
What is it about oil and as that you think made it accelerate semiconductor R&D?
In 1920 in Berlin there were more electrical taxes than gasoline one. But cheap gasoline killed electrical car industry.
Without that electrical cars would proceed to develop and batteries with high capacity would happen much sooner.
As for pollution it would not be that bad. Fuel would be expensive and cars with combustion engines would not happen on massive scale. There would be much more freight by trains and nuclear energy would be developed on much bigger scale.
> I think a lot of people actually dont realize the value it gives humanity. Lots of people think we would have been better of in an alternate universe where we never discovered oil & gas. How is this short therm value for people using them? They are drivers of the most fundamental stuff in our day to day lives. Either enabling billions of people cheap efficient transport, efficient agriculture producing cheap food, cheap and efficient global shipping of goods, a great portable and ajustable source of electricity.
People who oppose the fossil fuel industry do not suggest we return to the 17th century tomorrow. They suggest being less wasteful with the resources we have (nobody would die from eating lentils instead of beef, even though this would cause 98% reduced CO2 emissions) and investing in alternative solutions that achieve similar outcomes but cause less harm to the environment. Some things being more expensive or less convenient would not be a global humanitarian catastrophe, and since you strongly believe humans are immensely adaptable and resilient I think you would agree we could adapt to this as well if working together.
> I think as of now its a question on how much you are willing to sacrifice human welfare over preserving current nature/environment.
No, it's about how much you are willing to sacrifice the quality of life of the current generation to preserve the quality of live of subsequent generations. The worry about causing instability in the environment is not an aesthetic concern about the purity of nature being lost, the worry is that such instability will cause real and tangible death and suffering for real humans and have long term negative consequences for future generations.
> Extreme weather has largely been solved for humans, the trend is still less death and starvation caused by extreme weather, we are immensely adaptable and resilient.
You will have to provide some better source than your gut feeling and a cheerful attitude for me to believe you on this over the countless of people who have done actual analysis and vehemently disagree with you. Just a single example to get you started:
"This report’s projections of morbidity and mortality from climate-intensified natural disasters, cumulatively close to 15 million deaths, more than two billion healthy life years lost, and $12.5 trillion in economic losses by 2050 bring into focus the dimensions of the crisis. The risk from global warming threatens to destabilize both the healthcare ecosystems and the planet. [1]"
You claim to be against irrational decisions, but seem to base your "rational" view on very simplistic analysis about economic value always being good and the 17th century being bad, combined with a scoopful of wishful thinking.
Man, come on.. There are even at least two comments from people in this thread arguing this exact point. Ill promise you its frequency is even higher in the real world than on HN.
You must not be very much exposed to the environmental movement, or be much online, if you havent seen this.
The fossil fuel industry is both the most subsidized industry worldwide (https://en.wikipedia.org/wiki/Fossil_fuel_subsidies) and the second most expensive source of energy (at least for electricity production). The only energy source that is more expensive is nuclear (!).
The second most expensive source of energy is misleading in terms of whole picture. They are using a theoretical cost per kwh generated. You have to account for the much higher infrastructure and systemic cost of electricity generation you can not control (wind/solar). You cant simply use wind or solar without pairing it with an controllable source like hydro, gas, coal or batteries. Which is why the world is still very much using gas and coal (and still building more). Renewables are a cheap and good supplement to these sources, you just cant replace them cheaply (yet).
Regarding "the most subsidized industry worldwide", this wikipedia article does not mention any tax revenue and taxation of these companies. Which are stil very often government cash cows and often pays much more taxes than other corporations. The subsidies are straight to citizen's gas tanks and heating bills.
"Subsidies are mainly on consumption,[3] such as a lower sales tax on natural gas for residential heating; or subsidies on production, such as tax breaks on exploration for oil."
In my country Norway for example, we have tax breaks on exploration to incentivize investment in exploration, but you have to take into account that these companies have an 80 corporate tax rate! In many petro states they are straight up nationalized companies.
It is a tricky situation isn't it? We wouldn't have gotten where we are without fossil fuels, but now we realize they are not sustainable to be dependent on and we cannot continue this level of growth. I don't think it is actually possible using current means to power what we have come to know as a "first-world lifestyle" for the majority of the planet.
Thats not true. We don't know if we would be able to be were we at.
There is also no value in this. If we owuldn't known about progress through oil and gas, who would say that we would be unable to get to the same point just a 100 years later?
No own would be hurt if we would have achieved this 100 years later but healthier.
It was also ignored on purpose. Oil companies knew very well, researchers knew. Apparently there were big demonstrations here in germany in the 70ties so our parents knew too.
Life came inbetween apparently.
And from a pure calculation point of view: Its actually very easy to switch over to renewable. As of today, we do have everything we need.
How would we do the whole industrial revolution thing on whale oil and lumber? Whales would most certainly be extinct by now, thats for sure.
100 years later is an immense amount of extra human suffering, not to say that reaching current level would most certainly take much much longer than 100 extra years.
Im sorry but this whole tirade is just delusional. Its cheaper and better to replace all use of fossil fuels with renewables? Why are we not doing it? Waiting to here your grand conspiracy as of why people are not "doing it".
Why did china build over 50(78GW) new large scale coal plants last year when they could get so much cheaper renewable?
Would you say the same thing about human suffering if the bronze age was 100 years later? And what about all the suffering and deaths from the pollution? Or the massive global wars fossil fuels enabled? Because without massive oil and gas reserves both WWI and WWII would have been far harder to sustain or commit to in the first place.
With such a massive shift in politics and technology with a lack of fossil fuels I think it is near impossible to compare the modern world to a world without those.
Because people didn't care that oil and gas is breaking our planet 100 years ago. Or didn't knew and capitalism made the people in power very very rich very fast.
At that time we still lived and heated normally. For sure the brits destroyed a lot of their trees but you know? They could.
What do you think would have happened if we had a small population collaps at that time and HAD to consume sustainable? We would be less people for sure, but we wouldn't have killed the missing people, they would have not been created in the first place.
We created the first solar panel 1883. The first EV in 1884.
China is still using coal because they are in the same dilemma as we all are: we ignored the impact and keep the status quo. But China build a lot of coal plants for renewing aging ones and they are massivle building out solar.
So why are my neighbours not doing it? Man i talked to sooooo many people about this, are you ready? Because people don't care. Or they don't like new things. Or they don't understand why it would be better.
Yes thats the conspiricy. People can't do the math, don't care about climate change or just don't want something to change.
Everyone i know who has solar panels on the roof, a small battery and heat pump literlay saving money and would never switch back. Every single one of them.
The Industrial Revolution started in 1760-1800 and was driven by coal, completely replacing wood as the primary industrial fuel. We almost exterminated whales and deforested the entirety of Europe before discovering fossil fuels, which both bounced back after.
The first EV an the first solar panel are second order effects and only possible because of the industrial revolution driving massive human innovation and growth. Good luck reaching the levels of industrialization and tech required to mass produce solar panels by using wood. Producing 1 ton of charcoal from wood, requires 4-7 tons of wood. To smelt a single ton of iron you then again need multiple tons of coal. Good luck industrializing without turning the whole planet into woodchopping and wood planting farm. It was all made possible by fossil coal, oil and gas.
Everything is essentially downstream of industrialization enabled by coal and subsequently the superior oil and gas.
And saying that oil and gas was breaking our planet doesn't make sense, if anything these are great replacements of coal.
You are also diminishing the brutal life of pre-industrialization times. Staggering high child-mortality rates, low life expectancy, and an high amounts of deaths caused by starvation and extreme weather events, like droughts and floods.
Solar plus battery takes many years to be paid back. If this setup is actually cheaper, industrial scale solar+battery would be huge. Solar on its own is a great cheap pairing with stable energy sources like hydro, gas and coal, which is partly why china is doing this.
People do actually adopt green tech when it makes financially sense, just look at the huge boom of adoption of AC and heatpumps around the world. Because it massively reduces electricity cost of heating and cooling.
How much extra investment to you think green tech companies get for pension funds excluding investment in this sector? They also only invest in publicly listed companies, not green startups. To me it seems like the exclusion is based on them viewing it immoral to invest in these companies..
I think the right way to go about this is to tax consumption of fossil fuels in countries where we can afford it and use the money to subsidize green tech/industry.
I think Europe happily buys from the Gulf currently, and reluctantly buys from Russia if they have to.
Its more about being self sufficient. This is something that can easily be weaponized against us. E.g. Russia using Europes own money to finance their invasion of Ukraine.
The slavery part doesn't seem like a rational decision to me.
Why are we pretending that slavery doesn't provide an immense amount of value for humanity, and that it's horrible to invest or support building out any slavery production whatsoever?
Lets not do produce it ourselves, lets just instead outsource it to Africa...
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Snide comparisons aside, I'd just say that we can accept that fossil fuels played a gigantic and important role in getting us to where we are, and also acknowledge that we'll continue to need fossil fuels in the near future, but that does *not* mean that we need to accept that investment in even more expansion of the fossil fuel industry is a good idea.
Slavery is evil. Fossil fuels is actually still a net good for humanity. E.g. the consequences of removing access to these energy sources, would be overwhelmingly more negative for humanity right now, than the consequence of global warming.
The transition is moving ahead, it just takes time, and we need more technological breakthroughs and innovation. Trying to attack production instead of solving demand, can cause serious consequences, in which the poorest countries in the world would suffer the most.
Oh sorry, I forgot to look at my D&D alignment charts before making my comment, I didnt realize that slavery was evil and thus impermissible. I guess there's no possible comparison to be made with other economic practices that cause massive harm to some people, but benefit others in the short term.
For the sake of argument though, what if we lived in a situation where a very large portion of our agriculture, and other vital forms of economic activity were reliant on slavery? What if there were alternatives, but they weren't quite as economically entrenched, and an overnight banning of slavery would cause an economic collapse that'd cause large scale suffering.
In this hypothetical scenario, would we say that slavery is a net good for humanity? Wouldn't it be okay for our pension funds to invest in more slave production?
I just find it so funny how this person is willing to use completely different ethical frameworks in the same sentence when talking about slavery, versus when talking about fossil fuels.
With fossil fuels, we go and start talking about 'net benefits', and we're willing to accept some catastrophically bad effects in order to reap some benefits, but then when the conversation is about slavery suddenly we switch to toddler ethics of "that's evil." without any consideration for weighing the positives and negatives.
Doesn’t one major fund reducing investment in fossil fuels and increasing investment in renewable energy precisely migrate towards the notion of helping solve demand and encourage technological breakthroughs and innovation?
I think the right way to go about this is to tax consumption. The most efficient one would just be a co2 tax, to not favoritize some emission over others. This is mostly fine in western rich countries, and we already do this to some extent by putting extra taxes and fees on petrol, carbon emissions and stuff.
Becoming reliant on countries you dont want to be reliant on, and pretending we dont desperately need this to get the wheels turning is a strategic blunder.
Higher global fossil fuels costs have strong negative effects on peoples welfare, especially in poorer countries. Whenever we get high oil/gas prices, we get price jumps on artificial fertilizer, food, transport and energy. Everything gets more expensive. Its straight up national emergency when something threatens supply of oil and gas in many of these countries when we get events like closing of the hormuz strait.
> I think the right way to go about this is to tax consumption. The most efficient one would just be a co2 tax, to not favoritize some emission over others.
I too thought this for a long time. But after watching taxes on consumption basically be a non-starter in the US for a long time, I’m not so sure anymore. Gas taxes are also regressive, which means the people who feel it the most are the ones least able to pay it. Raising the gas tax while retaining one’s elected position is challenging in the US to say the least. In most places in the US, driving is not a luxury.
To be clear, I think we need to move off of fossil fuels to the greatest extent possible as soon as possible. For those with means, it is a great moral failing to continue to drive a gas guzzler and heat one’s home with fossil fuels when there are better affordable alternatives. I’ve been driving an EV for nearly four years; it is now not just more affordable than a gas powered vehicle, it is more convenient. For me, the cherry on the top is that I also do not pay for electricity, because I took advantage of the pre-Trump II era solar tax subsidy and built a massive one.
The tax break was good for me, and it’s a shame that is gone (I paid off that panel in 5 MONTHS with the help of the subsidy), but tax breaks really only help the relatively wealthy. We need an investment in infrastructure for the masses to break their dependence on fossil fuels. I’m not really sure what that is.
As a Norwegian I envy your ethical pension fund. Our Norwegian pension fund goes by the name the oil fund, and was financed solely by fossil fuel production.
The new asymmetric reality is mostly short/medium range drones, ECMs and hypersonic missles. Loitering munitions are going to make tanks mostly obsolete and Jets are too expensive to risk over enemy territory that still has working radar/anti-air except for large shock&awe actions.
A lot of this stuff is hard to stop and too cheap to effectively stop economically anyhow, the best solution is distance and preemptive strikes at staging areas.
We can discuss if a society should have a certain amount of GDP invested into defense and i'm not necessarily against it.
I would think educating people properly is good, I also think the swizz model is good in sense of everyone learns to handle a gun and can have it at home (as long as high security standards are set and its taken very serious).
It could be used as a tool to strengthen societies responsibility, communication and combined with what the THW is doing (technical help org).
But my statment is still true:
We do not have to catch up. We are absolutly capable of defending ourselfs against the current biggest threat which is Russia.
While I support the individual right to keep and bear arms, it's ludicrous to think that a few assault rifles in private hands could ever be effective against drones. There has been a revolution in military affairs in just the last few years. The game has fundamentally changed.
I think that's less true than the media would have you believe.
We're undergoing a lot of propaganda about how effective Ukraine is against Russia, but that's despite most European countries practically immolating their own stockpiles of defence capability, and they're doing so somewhat unoformily (while Russia does everything they can to weaken the European homogeneity; see their funding into brexit and anti-EU seniment spreading bot farms on social media).
It's definitely not a given that we can stand up to Russia with our current capability, and it's also the case that we'd be throwing human capital at the problem because we failed to adequately invest.
I spoke to one person from Ukraine who was enlisted, he mentioned he was waiting for something from the UK, I asked how long does it normally take.. he told me that he doesn't measure time in weeks, but how many of his friends he he will lose.
.. that hit me hard, and it made me consider who incredibly naive and coddled I was to believe that investing in military or weapons things is a "right wing" or "bad" thing.
War always seems so far away until it's on your door.
Its not propaganda when you can see it. We know what Putin showes in his Military parade and we know the stockpile of tanks they have and had due to satelite images.
My statement still stands, we do not need to increase defence spending to beat russia.
You said something different though: "We need to increase defence spending to have as little as human risk as possible".
I wouldn't call it naive, more optimistic. And even before Ukraine, we do have military. EU has high tec military.
Even before Ukraine, the EU spend more in military than Russia.
And regarding resources for Ukraine: We do fight a proxy war. We are not fighting Russia directly. This means some people don't want to spend money and resources on this, we are nog aligned across europe and it is always very unclear how and how much we help. This would look differently if russia would declare war against the EU.
It's not so much a matter of spending levels but what you get for that spending. Since the end of the Cold War, most European countries have treated their militaries as essentially government jobs programs. The money was thrown away to hold down unemployment, and any combat effectiveness was incidental. The current crisis is finally forcing a change in that mentality but it will take years to turn the situation around.
In nominal terms "we outspend them" is true, but it misses the forest for the trees.
Nominal spend is the wrong yardstick when one side builds at home for a fraction of the cost; Russian labour, steel and energy are far cheaper at the point of use, which is why PPP estimates put their real military output roughly level with the whole of Europe combined.
And spend isn't the binding constraint anyway: it's production. A budget line is not a full magazine, and we've spent years throwing our stockpiles into Ukraine while letting our shell and propellant lines wither instead of refilling them.
"We don't need to catch up" assumes the money on the page is already steel in the field. It isn't.
Given the Russian threat to Europe and the fact that we are actively sending arms to Ukraine, investing in manufacturing arms doesn't seem like an imoral thing to do. Quite the opposite.
IANAeconomist but may I ask, tongue firmly in cheek, if they also only pour water into the shallow end of swimming pools to avoid contributing drownings?
I'm not a huge fan of Elon Musk but Tesla is a company that produces electric cars (mostly in western countries with half-decent labour laws), it's not associated with any of those things.
I guess one could argue with some merit that the governance is bad enough to exclude it on that basis alone?
Agreed - Tesla has been an insanely good investment. I'm not sure about the next 10 years, but people have continuously underestimated them (and Elon Musk). The Norwegian so called Oil Fund owns more than 1% of Tesla.
has it been an insanely good investment because of changes to profit and loss, or because of other factors? (of course, building a car company of the scale they have is impressive. But by looking at tesla's financials vs stock price, youd conclude basically any other car company ever was a great buy by any reasonable metric)
"Danish pension company Akademikir Pension has announced it will divest from Tesla due to ongoing concerns about labour rights, corporate governance, and Tesla CEO and co-founder, Elon Musk's behaviour."
Tesla has a P/E wildly out of line with the rest of their sector and is facing strong competition with a largely absentee CEO who has a history of making very bad decisions over the objections of more skilled staff (politics, of course, but also things like how the Cybertruck is so expensive to make and own). At some point that bubble is going to pop so I can understand a pension fund being more focused on long term returns passing on them.
Europe is still a democracy and while its apparently not relevant in the US America, Elon Musk as the richest person on the planet directly tried to involve him in europe elections.
In a liberal society governed by laws, increased scrutiny must follow evidence of wrongdoing, not mere association. If European countries have problems with Musk’s conduct (lord knows I do) they should either pass legislation targeting behavior he has engaged in that is not already illegal, or charge him with a crime/bring a civil suit against him if he has violated existing law.
To be clear, this has already happened to some degree. See Paris prosecutors investigating him for the distribution of child pornography. But targeting companies he is affiliated with for his personal behavior violates the principle of the generality of law.
You might want some of those weapons, once our faithless, perfidious country (meaning the USA) decides to leave you to the Russian wolves. Don't depend too much on alliances.
And where would Norway be without fossil fuels, exactly? That's basically the sole source of your nation's wealth.
As for Tesla and other companies led by Elon Musk... well, yeah, F that guy. But don't throw the proverbial baby out with the bathwater.
I wanted to see how well Akademikerpension has done wrt. returns. This graph shows average yearly return from the financial crisis 2009 until 2021 and they are actually the best performing among other Danish pension funds [1].
Judging a pension fund by how it performs in a bull market seems wrong. Like their main job is to limit your downside from market crashes (if they're not doing that then they offer nothing compared to an index fund), so its strange to not include 2008 crisis (or .com bubble popping).
Checking this shows that the top 2 performers in this graph lost more money (~8%) in 2008 than the bottom 2 (~2%)
Well, often you don't get to "dump" your pension fund. In Denmark, it is your employer deciding what pension fund to use, and you will then have to use it. It is kinda ridiculous.
I really want a QQQ/VOO replacement that excludes these new rushed IPOs that are just exit liquidity. There are ETFs that exclude harmful industries like gambling, weapons and tobacco. How about an ETF that doesn't include IPOs for six months or until insider lock ups periods are over.
Dimensional runs a bunch of ETFs which are effectively US & world equity index trackers that don’t slavishly follow the indices & can therefore avoid being forced to buy into IPOs or index updates. E.g. DFUS is effectively VTI (IIRC) without the requirement to immediately buy into IPOs that are added to the index:
I don’t think they have a QQQ equivalent but I haven’t looked at their entire ETF list.
(I have no relationship with Dimensional, nor do I invest in these funds - I just saw them mentioned in a YT video on this topic a few months ago: https://www.youtube.com/watch?v=mqIHa6URUPk )
It's important to note, that whether it's intentional (doubt) or genuine mistake, he's misleading viewers when he says that Dimensional has outperformed other funds or indexes. In fact most of the Dimensional funds have underperformed markets, and they do so at higher (albeit approachable) TERs of 0.25.
There's a (rather short for his standards) video made by Paolo Coletti, professor of financial economy at Trento about dimensional performances.
It's in Italian, but both subtitles and Youtube's auto audio translation works fine.
He always includes data and google colabs so people can run tests and verify numbers themselves if they disagree.
Most of the Dimensional ETFs seem to be following some kind of value investment strategy where they take an index but nudge it a bit by some value factor which is claimed to be based on long standing research. It wouldn’t be surprising if this value factor has underperformed in recent years which have been dominated by the rise of growth stocks. The video you link to seems to be talking about these ETFs, although I haven’t dived into the numbers.
As far as I can tell the straightforward US & world equity ETFs I’m referring to above don’t have this value bias.
I think VGT is a good QQQ replacement. It is based [1] on the MSCI US Investable Market Information Technology 25/50 Index which is free-float adjusted [2] [3], meaning that SpaceX will have a lower weight due to its lower free float. Also, VGT has a substantially lower expense ratio (9 bps / year [4]) than QQQ (18 bps / year [5]). You can compare VGT and QQQ's holdings on these pages [6] [7].
No it’s not. When the asset management industry says “information technology” they exclude the technology used for communication. That’s why VGT doesn’t invest in GOOG or META. AMZN is consumer discretionary so it’s also excluded.
That's fantastic. Thanks! I actually use QQQM which has lower fees. Seems like Invesco pulled a trick from marketing and segmented the market to have it both ways. I also need to find leveraged ETFs that have float adjusted weights which is a bit trickier. I might just pull out of TQQQ until the dust settles.
Besides laziness being a tradition among programmers (in a good way), that kind of complex activity is going to generate tax in a lot of jurisdictions.
If you care to explain why, I’m interested. I imagine a situation where large Sum X is in ETF but gets adapted by a few little shorts. It’s still mainly the ETF in the portfolio. (Exactly this is why in my firm some ETFs are deemed too precise, since they are thought to follow the insider knowledge as well.)
VTI avoids these issues.
It's float adjusted market cap weighted.
More float allows better price discovery.
So a company like spacex has negligible weight.
So are other major index funds. That's not the problem.
The problem is that the NASDAQ 100 and most likely also S&P 500, change their rules to permit SpaceX to be added early without traditional time for price discovery. It happens jsut five trading days before the major index rebalance.
After float adjustment SpaceX could be 1% of NASDAQ and 0.7% of SP500, but after full tranche escalation that takes over 130 days, SpaceX weight can be over 3% of NASDAQ and almost 2% of SP500 if the market cap stays near $1.5T.
(I think the price will decrease, so the weight will be smaller)
This is just a ploy to get exit liqudity as
brikym, said. SpaceX collects enough capital to pay Twitter acquisition loans and then some, but the IPO not major boost for SpaceX finances. The coming merger with Tesla is clearly in the plans (C stocks).
You are making a mistake in equating several things here. Not only is this SpaceX IPO that has latched itself onto pensions through accelerated inclusion in the S&P100 and other funds a different and rather unique matter, but excluding harmful industries is really rather stupid of people who oppose those industries.
If, e.g., all those who opposed those industries had instead bought the industry stock, the people with those ideals opposed to those industries could have at the very least profited from the sale of the stock...which the company itself basically does not see direct benefit from (you are not buying the stock from the company or giving the company any money in most case)...and used/committed that money to even greater opposition. If a catalytic number of those had formed, they could have also even made real impact through shareholder initiatives and actions demanding changes by pressuring board members who rely on votes, etc.
It's one of those nonsensical, moralistic and ...sorry... foolish mindsets that common people have, the idea that simply by not participating the King will leave them be. The psychopathic narcissists in control will never leave you be, no matter how much you virtue signal by not buying their stock from someone else that is not the company or no matter how much you ask or how far you run and beg and ask to be left alone.
Frankly, although I am not certain that it was done intentionally, if I were a major mover and more powerful person, I would propose the very kind of moralizing, self-righteous campaign that has shot the commoners in their feet by getting them to simply check out and not participate in things the could have otherwise controlled a lot more.
So instead of people who actually care...but are clearly rather foolish...all/a disproportionate amount of control and power and money is left to those who do not have those qualms. Hence why none of this "excluding harmful industries" has affected anything whatsoever and we now have square mile measured AI data centers and tens of millions of low climate impact people being moved into high climate impact countries, and we have more war and death and addiction than humanity has seen in 90 years.
In case it is not yet clear to some of us, a stock is like if you went to some second hand/thrift store and bought a brand of clothing that was reviled for some reason or another, i.e., use of child sex slave labor, you giving a thrift store money to wear the second hand clothing not only does not benefit the reviled company, but just alone wearing second hand clothing will likely have more a positive impact than guying some other company's clothing that will later turn out to have used regular child labor.
While not wrong, your perspective is very simplistic. A company gains massively from strong stock performance - they can issue more shares to raise capital, give handouts, take loans at better rate, pursue M&A with stock payment, ... So anyone who buys stock they ethically disagree with is certainly supporting that company - and inversely not using those funds to the advantage of other companies that they find morally more appealing.
The point of these broad ETFs is that they include everything. Let the market decide. Of course they should own one of the largest public companies in the world. They're changing the rules on inclusion because the ipo is unprecedented and not owning it because [reasons] would be a dereliction of their duties.
You want an ESG fund
Also I dont see how weapons companies are harmful. Unless you're so naive to think defense is not a thing any person or country has to worry about in 2026
> Let the market decide... They're changing the rules on inclusion ...
You have the market deciding and the rules changing in the same paragraph and nothing's bothering you. I genuinely envy your peace of mind, my friend. Some of us are truly blessed.
The rules changed because it's unprecedented. It's not complicated. If your job is to "track the market" and there is this company that is worth $1+ trillion, you're not doing your job if you don't have exposure to this company.
Just be honest with yourself. The only reason you and others have an issue is because of politics. You don't like Musk for whatever reason and now you're very opinionated about the internal workings of index selection, when prior to reading about it in the NYT or something, you had no idea.
You don't care about the arcane byzantine process, you think rocket man is bad. I feel bad for people that get so easy manipulated. It's a hell of a way to live your life, waking up and reading corporate media to tell you what you should be angry about today
Ignoring the moral questions, the issue is that the old waiting period had a purpose. The market *isn't* getting an opportunity to decide here. There's a concern that these are a glorified pump & dump where initial investors extract all the value via the IPO and then the price craters once it's on the open market.
It'd be nice to give the market a period of time to figure out what it *really* values these companies.
Doesn’t matter that it’s unprecedented by value, Whole point of rules is confirm that value isn’t fake by letting the market stabilize after IPO and then if value is there, it’s added to the index. Yes, some money could be lost if value is there but reverse is true as well.
Hang on, wasn't the market supposed to work it out? How come it's someone's job to fast-track inclusion? Isn't intervening directly in the market a communist policy? Are you a communist by any chance?
I think their point is not the ESG component, but firms with traditionally irrational valuations (à la GameStop) for which index inclusion exceptions have been made to facilitate short term liquidity for IPO participants. Seems as though one should be able to hold the broad market less that component.
Let the market decide what, though? What the market cares about may be different from what you care about, if the average investor has a higher tolerance for risk that you do. For pension funds, long term stability is key. A wide spread of large companies has traditionally been a good way to achieve that, but that isn’t guaranteed.
> Let the market decide. Of course they should own one of the largest public companies in the world.
The pension fund is the customer here. The market is already deciding. You're free to invest your own money as you see fit. The pension fund's money is not yours to decide what to do with.
The Financial Times' Unhedged Podcast covered the SpaceX IPO recently and highlighted the same issues that the Danish pension fund raised concerns about.
I think European countries need to get serious about investing money locally. The UK is a particularly egregious example but it’s taking begging and pleading with the mansion house accord to even convince pensions to try to invest in the UK economy. Every country should make a portion of local (at least within Europe) investment a prerequisite for whatever favourable tax treatment pensions and similar products get.
So much wealth is tied up in pensions and it’s folly to let it all go to supporting the U.S. and eschew local investment altogether.
Requiring local investing by pension funds would be rather like pushing on a rope. Until more European countries get serious about a growth agenda and reducing government interference in free markets there won't be many good investment opportunities.
I partially agree, but if my private pension needed to invest into the underperforming FTSE250 by law, I’d just opt out of that system and put my savings into a US/Emerging-markets index myself.
I’m not patriotic enough to spaff my compound interest opportunity on a bunch of dying tobacco, oil, & mineral extraction companies to put any of it to work in the FTSE250.
I don’t think it needs to be the FTSE and I don’t think it even needs to be all that much in UK funds but if you look at the default allocations of many large pensions it’s single digit UK equity exposure which I think isn’t really acceptable.
I don't think regular people should have a say where their pensions are invested. It should automatically be in what's best long term for the country they live in.
Apologies for the naivety, but, why is SpaceX valued so high? Starlink? Are rockets really a lucrative business? Don’t get me wrong, being able to send objects up into orbit is cool, but is it $1.8T cool?
No. Space is not lucrative or profitable. The SpaceX profit story rests entirely on Starlink. Starlink has a plausible moat servicing ships at sea and extreme remote areas. The big problem for Starlink is that they are trying to grow into a shrinking TAM, as terrestrial wireless expands with ever cheaper equipment ever farther into the countryside that Starlink is counting on for their TAM.
Elon's visions border on self parody. If I told you that humanoid robots were going to be digging tunnels for the Boring Company you'd have to stop and think if I was pulling your leg.
To be clear, I don't support SpaceX specifically, but the amount of resources available to us from beyond our planet are quite literally infinite, only bounded by our ability to move fast enough to get it.
Comets that routinely pass by our planet have rare-earth metals in quantities that we don't even have on the planet at all. Hell, that's where our rare earth metals came from in the first place. Getting access to 100 million tonnes of platinum could totally change how we use the metal, right now it's most effective use is probably within catalytic converters to reduce emissions from cars.
Helium-3 and Deuterium in high quantities can be used as clean fusion fuel, basically clean atomic energy.
I struggle to see how these can't be lucrative in the long term.
I can't improve on how unlikely it is that any of that happens. Space is for exploration and the advancement of science, and to a certain extent engineering, if you don't mind the inefficiency of obtaining those advancements in engineering.
How many decades ago were people hyping space manufacturing? Where are the space factories? Where are the profits?
Because of the Musk reality distortion field. The claim is that all data centers will move into space, and that SpaceX will completely own that market.
The datacenter thing is mostly just a meme that billionaires say because it makes them feel smart and gets them media attention, it doesn't seem to move stock significantly.
The actual distortion field is around Starlink. Which is the main product and the only one that's (nominally) profitable. It's the one all the hype centers around. xAI is barely even notable in the AI space.
This also makes it possible to judge the size of the distortion field, as Starlink is just an ISP, for which we have accurate valuations. And for what it concerns shareholders, a strictly worse one than a conventional ISP. Space infra is much more expenive than putting some glass in the ground, once.
Comcast is a behemoth of a company doing far more than just ISP. Worth a "mere" $90 billion. Charter Communications is a similarly sized "pure" telecom. Worth $20 billion.
Both of the above ISP companies have roughly 30 million subscribers. Starlink has 10 million. Yet they want $2 trillion at IPO.
A 20x to 100x overvaluation. And what do you get beyond an ISP?
* A private aerospace company that's not doing notably better than the space divisions of old aerospace. (Remember: Starlink is already accounted for so doesn't count here)
* An AI company that has so little demand it's currently handing a bunch of compute to Anthropic for such a deep discount the latter has claimed to become profitable.
* Twitter. Which is worth either $33b if you count Elon's internal buyout valuation, or $10b if you count realistic valuations.
While there is some hype around "The future of space!", the reality is that the long term growth for that is fairly dead in the current geopolitical climate. Nobody's saying it out loud yet but US Aerospace is being replaced. Fewer and fewer US launches will be bought. The EU is even building their own Starlink equivalent.
Starship is going to make whole entire industries viable that were not viable previously. It might even take a significant chunk of air freight which is going to be a big deal with rising oil prices.
Is that supposed to be a joke? There is no plausible scenario where SpaceX gets any significant fraction of the air freight market. Even under the most optimistic scenario the costs for suborbital launch are much higher than regular airplanes.
In a few decades there might be a small market for carrying passengers long distances really fast. Initially for the military to insert special ops troops in a crisis, and eventually maybe for wealthy consumers after safety improves.
> The datacenter thing is mostly just a meme that billionaires say because it makes them feel smart and gets them media attention, it doesn't seem to move stock significantly.
A significant portion of their valuation is based on this. The spacex private stock price moved significantly based on this data center narrative.
> And for what it concerns shareholders, a strictly worse one than a conventional ISP.
This is ignorance. There is absolutely zero meaningful competition to Starlink in the maritime, aviation, and remote internet markets. 150mbps down with <80ms latency isn’t impressive in a city but it’s mind blowing on an airplane 1000 miles from land.
> The EU is even building their own Starlink equivalent.
No they aren’t. The only somewhat credible competitor so far is Amazon Kuiper(Leo) and they are still nascent.
> There is absolutely zero meaningful competition to Starlink in the maritime, aviation, and remote internet markets.
There are roughly 100,000 ships at sea. There are roughly 15,000 planes in the sky.
The remote internet markets are remote because either A) exceedingly few people live there, or B) exceedingly poor people live there. (And usually, both at the same time)
This just isn't a big market. That's why the telecom giants haven't bothered. To justify a trillion dollar valuation you're gonna need a billion users. SpaceX would be better off putting fiber into the ground in Africa.
I find it amusing to read comments like these, because they remind me of the massive awareness gap between people who understand SpaceX's product line, and those who don't.
In your world, you only see and interpret SpaceX's existing products. You then see SpaceX's eye-watering valuation, and then are confused where this comes from.
Meanwhile, people who understand SpaceX's product line, and the implications these products in five or ten years, can analyze the situation more accurately.
I can tell you are in the unaware group, since you don't mention nor analyze two of SpaceX's world-changing products (Starship and Starlink Mobile).
Rocket launch ex-Starlink is a small $N-billion market; a few dozen flights at $50M per flight. Starship is revolutionary and I can easily believe that it will expand the market by a remarkable order of magnitude. Multiple tens of billions. How does that justify a valuation over $1T?
Starlink Mobile is more significant, but it's still unlikely to double Starlink revenue -- most mobile traffic will always be transited by local cell phone towers.
P.S. I think somebody is going to make a lot of money from Starship. The money in space is not from launch but from the services it enables. Starlink >> Falcon9. But I don't think SpaceX is going to be the ones to find the next Starlink. It's much more likely to be a third party who launches on multiple providers to keep costs down.
Just to be very clear about Starship: We have a very limited amount of payload we are sending up in space every year.
The biggest jump in payload is starlink itself. Starlink though doesn't scale very well. V2 can only handle a certain amount of customers and has only a lifetime of 5 years.
Space-X has to build Starship to even being able to send v3 up to increase the margin of this setup. But even then, every 5 years that thing has to be replaced and new build.
Every mobile tower, fiber cable etc. underground has a lot higher lifetime than that.
Starlink also has the issue of latency handover. Every few minutes you have to do a handover which leads to package loss. I can't do a Teams Call through Starlink fyi.
And Starlink already exists and is relativly affordable despite that, they only have 9-10 Million customers and they had to increase the price.
And while all of this 'magic no one gets' is happening, Starship hasn't profen non leo orbit with proper payload AND reusability. Without reusability, they will not get the costs down that much anymore. Its already relativly cheap.
And in parallel all of this 'trillion dollar future margin magic' gets opposition by other companies like eutelsat and Amazon.
Ah yes the world changing product of starlink mobile. Which doesn't get booked in the USA, is slow and needs a lot of energy. Whatever you think this is, 500km mobile range is 500km and this on a planet were normal people already have a very very well working mobile setup for at least 10 years by now.
Is space-x some kind of business gap? yes sure. Will they make billions with this? Depending on other companes, yeah sure. Is it a trillion dollar business? No
Yes yes i'm fully unaware of this.
Btw. Musk def sells you the story of Mars and dyson sphere and stuff to keep the magic but while he does all of this, he rents out colossus 1 and 2 to his competitors because he is unable to sell his OWN AI product.
"You just don't understand bro" has been the trite handwaving of criticism for a over decade now. It already wore out when the bitcoin bros kept saying it to all their critics.
> I can tell you are in the unaware group, since you don't mention nor analyze two of SpaceX's world-changing products (Starship and Starlink Mobile).
Just because I did not mention Starship by name does not mean it's not in the reply.
And Starlink Mobile is still an ISP. "It's worth a trillion dollars because it's mobile!" Haven't heard that one since the Dotcom bubble.
But more to the point:
> Meanwhile, people who understand SpaceX's product line, and the implications these products in five or ten years, can analyze the situation more accurately.
They are looking 10 years forwards. I am looking 10 years back.
This exact same "just you wait, in 5 years there'll be a miracle technology that generates infinite profit" rhetoric has been used for those 10 years.
Still waiting on the miracle self-driving that was supposed to justify Tesla's $1.6 trillion.
This sounds amazing until something needs replacement. Until data centers on earth has a 99.99% (or higher) level of autonomous operation with very minimal requirements to maintenance and part replacements, they're not sending anything into orbit...
Why tungsten? In terms of thermal conductivity, It’s way worse than silver and copper and on par with good aluminium alloys. Those are cheaper and much lighter (so again much cheaper to put into orbit).
Where did they say that all data centers will move into space? I thought the claim was that it's going to be more and more feasible and profitable to have DC's in space.
His Scifi ideas are probably a min of 100 years too early.
And while he doesn't even need his own compute (renting out colossus 1 and 2), he thinks we will send server racks full of expensive hardware into space in no time.
Why?
Because his Space-X Trillion evaluation doesn't make sense if he doens't has payload for Starship.
So how much payload do we send to space? Actually not that much, starlink itself is the biggest change by far. So he builds Starship which he needs for starlink v3 but what then? Yeah Datacenter in space...
could it be that those people don't actually believe him and just appreciate the genuine shit-show he puts up enabling them to laugh at people who get sad about what he says, and their eagerness to believe
One must also consider the proximity between musk and the trump administration, the market pricing this proximity is the market pricing power, access and aligning its interest with the blatant collusion between political power and business in the US.
According to SpaceX's own documentation more than 80% of their value comes from xAI and their data centers. Starlink is where they are making the money, but they are pouring it into AI.
Starship makes space access 1000x cheaper than before, with cost-to-orbit under $10 / kilogram. Also much larger payloads become possible. That's an insane economic unlock, because space contains unlimited amounts of resources and energy. Space-based manufacturing, building space hotels, mining asteroids etc. becomes viable. Larger satellites and probes for commercial or scientific use becomes possible.
All this might not make sense in a standard business sense. Real profits might be decades away, who knows. Anyway, people are willing to throw their money at it, because they think it's important.
If they succeed in the long term, it'll easily be the most valuable company on Earth.
Big picture: Nice-sounding economic theories claim that stock market valuations are rational, but those theories are mostly bullshit. As soon as the actual humans in the real-world stock market get excited, or scared, or otherwise emotional, they mostly stop caring about all that stupid boring gotta-do-math "rational" stuff.
Yes, eventually, the humans have to sober up, and stock market valuations return to approximately what the economic theories say they should be. But the dangers of betting on that "eventually" are very well known: https://quoteinvestigator.com/2011/08/09/remain-solvent/
The earth is finite, and space, for all intents and purposes, is not, and expansion into it would thus be required to sustain any super linear growth of the economy.
Well, and rockets are cool. Perhaps people would much rather invest in something with the veneer of furthering space exploration (and the promise of infinite riches) than buy into some crypto blockchain startup.
And, its not as if other current valuations are sane.
SpaceX isn't opening space to everyone. They're are preparing for the select few to be able to escape once the earth is no longer sustainable due to their own efforts.
Actually given that the first colonists on Mars will live pretty miserable lives before dying early of radiation poisoning Musk and Co are trying to recruit other people to move there.
Musk, Thiel, Bezos etc. none of these guys have ever said they want to move there.
With schemes like SpaceX, and the general number of large-cap-but-negative-earnings companies trading on the market, I feel like the conventional wisdom of DCA and chill / just passively buy the index will turn into an underperforming strategy vs a slightly more active or opinionated approach.
In my understanding some index funds i.e. FTSE Russel ones will include spacex with the weight based on the floated stocks, so in practice the weight in the index will be small enough in All Cap etc indices. So I decided for myself it is not a cause for concern. But I think now it is the time to look for index providers who do not decide to bend the rules for short term gain (i.e. S&P and Nasdaq).
SpaceX is responded to the float issues by having a continuous increase in the unlocked stock available on the market.
And NASDAQ was the first index to promise a quick inclusion of spacex.
But isn’t “passively buying the index” still exposed to this, at least if you’re not buying “equal weight” version? Dividend stocks sounds even more appealing to me, I read that as “companies that are generating stable profits now”.
I wish they didn’t manage to change the nasdaq rules, forcing a lot of index ETFs to buy spacex at IPO, whatever the price.
Edit: glad to see vanguard VT tracks FTSE which isn’t impacted. The amount of overvalued spacex stock in VT will be minimal down the line as they use the amount of publicly available shares to calculate the weight in the index, which is the more sensible way to do it, Musk’s scam not withstanding.
As a Nordic (Finland), I think this is true. In the history, US has been always admired and we've loved to travel there and cherish the culture. Damn, I was there when Conan O'Brien traveled to Helsinki, and greeting him with this massive crowd of people who really love him. I married an American, I've traveled through the country multiple times with my partner. Love the food, people, the nature, the cities.
But this has definitely changed for me now. The idea of crossing the border and having to flip a coin is the border control guy a nice guy or not is not appealing as a diabetic who needs his phone to be with him untampered and who doesn't want to sit in a cell somewhere for days/weeks because they posted a funny meme of a person you can't joke about. Or who just witnesses this absolute inequality happening, and who witnesses the leaders of this country coming to my country and giving their support for parties who want me to not marry and who doesn't want to see me existing.
I am just tired. And sad. I wish I could get our relationship back with the US but I don't know... Even if we backtrack from here, get back to the "olden times", it will take a moment until I can enjoy US again.
Well... Strip searching and jailing young German girls in the border is not something I hear happening very often in countries like Canada, Germany, Denmark, Finland... Actually I have not heard that happening even once! My American partner has crossed the German border countless of times from US. Before they got an EU passport, even then the border queue was prompt and the guard sometimes asked a joke in German and a minute later let them pass.
I waited hours in Newark even before the current joke of a government. The risk of being in a jail without my phone which has a life-saving app to manage my diabetes is a risk I am not going to take.
> Actually I have not heard that happening even once!
Have you heard that happening more than once?
Having your luggage searched, long interrogations, dog sniffing, and then more interrogations - that has been common on international borders. All for no other reason than the border guard didn't like your face. That's my real life experience as a person who used to travel a lot. And many others I've met told similar stories, including being denied entry. So it's been a coin flip for a long time.
Last time I read that story they were given the option to immediately fly back to Germany for free after their tourist visa was declined but the girls declined the flight because they wanted to fly somewhere else on another flight which wasn’t available yet, which means they had to be detained. So they stayed overnight in an immigration detention facility which included a search.
They also flew to Hawaii without a hotel booked which is something the guards always look for (that was basically 101 common knowledge when I first crossed 15yrs ago). Just like how having a flight out prebooked is important.
Realistically, as World War 2 demonstrated, Finland’s independence rests on America’s will to protect it. And after it, Norway and Sweden as well.
Strategically modifying one’s pension fund choices to prevent having sub-prime companies bundled into a possible success is not a sign of anything. The Nordic nations will attempt to stay allied to the US because survival depends on it. They are much closer to the frontier and Western Europe’s ability and desire to protect them is substantially weaker.
In the event of a fall of NATO far western countries like Spain or Portugal will likely free-ride by virtue of their geography. The Finns get no such benefit.
Right, that makes sense. I assume it happens often as part of the governance process. my original statement could have be better phrased as a question.
What are your thoughts on the general consensus of Nordics views and opinions about the US?
As a Dane, I would say yes. Especially among boomers there was always a genuine appreciation of the US and its role as guardian of a rules-based international order and western civilization more generally.
I think that sentiment has gone, even as younger generations have increasingly incorporated English words, music, TV and more into their own, but you seldom hear the same genuine trust in the US as a force for good.
I'd say in Norway there's more inherent trust in America. People may appear a bit more critical, but by now it's part of the culture. Even though you have some regresion of that trust due to Trump and polarization, I'd say most people see the US as a core part of Western society, cultural and critical to defense.
The issue is raised a lot but there is less and less time and I don't think it will hit mainstream before IPO is done and pension funds/passive investors will be forced to buy it.
It really does look bad: low float multiplier rule (that will overweight SpaceX) introduced very recently, fast inclusion mechanism, insiders being allowed to sell faster than usual etc.
It all looks like an orchestrated dump into passive investors/pension funds/other ETF holders.
Investing in IPOs is a terrible strategy historically. Here we have several mega IPOs incoming with rules being re-designed just for them to be included faster in your "passive" portfolio.
I've recently been thinking about pulling my money from all of the US funds that I currently have. I really don't want my investments to be in SpaceX, OpenAI or Anthropic.
With the new Nasdaq 100 fast track rule, I'd certainly get out of any index that tracks it, or any funds that are invested in it. I don't know if any other indexes have had similar policy changes...but, if it works this time, and insiders are able to steal a few billion dollars from retirement funds without people even realizing it, I'm sure it'll become more commonplace until we have a functional government that regulates this kind of crime.
Apparently my US index fund is based on MSCI, which is even worse: eligible after 10 trading days. Although the float-adjusted market cap calculation should lessen the blow.
> been thinking about pulling my money from all of the US funds that I currently have
What’s holding you back? And what alternative investments are you considering?
I recently did homework to decide whether to double down on VOO (S&P 500 index) or to diversify via VXUS (ex-US index), and concluded VOO is better for my risk-adjusted ROI outlook and time horizon.
Momentum, really. I usually just buy more of a given fund and don't really take any out. My small portfolio is split across different funds, so I'd probably just split around the money I'd withdraw from the US-based ones into the other ones.
Google being one of the most profitable companies on the planet might contribute? OpenAI and Anthropic don't seem to be profitable while SpaceX is weighed down by heavy losses on grok.
Why not Anthropic? They’re a very rare company capable of charging $200 per month per seat level fee across the corporate workforce.
Yes their compute costs are astronomical, but that can be managed down over time by more efficiency or mild enshittification that doesn’t create too much churn.
> Why not Anthropic? They’re a very rare company capable of charging $200 per month per seat level fee across the corporate workforce.
Because no part of this statement is accurate. They’d like investors to believe it’s very rare but they have multiple strong competitors, most of whom have much better financials, and the entire sector is worried that the open models are going to effectively cap rates below what they need to pay off their massive investments. Lastly, they’re not universally must-have in software development which is one of the domains best suited for LLMs but most corporate work lacks similar correctness oracles and we’re already seeing major corporate customers reconsider the cost/benefit ratio.
None of that means they’re doomed but a lot of stars need to align for them to keep their valuation up. They don’t need to go out of business for investors to lose money buying in at the peak.
You would think you’re investing in a software technology company, but after reading a bit of news stories, you realize you’re quite literally funding war crimes. If I invested in an arms company, I’d have reasonable expectations about what I invest in. Investing in Anthropic at surface level looks like investing in software for hobbies and business.
It’s pretty depressing to be honest. I don’t know how I could work in any of these military industry companies.
Normally Danish pension companies and banks will refuse to invest your money in weapons manufactures (unless you have a lot of money, then they apparently don't care). But as long as your money is invested as a pool, they won't do weapons.
I think you're right that e.g. Anthropic wouldn't be on the block list, because: It's an IT company, and I suspect that even Palantir might make the cut. It is fairly annoying, because my pension fund won't invest in Rheinmetall, SAAB or Kongberg, which I think they should, but they will probably invest in Anthropic, OpenAI, and SpaceX, which I don't really like.
All major indices have always included defense contractors.
Also, when you buy into an index fund, you are not funding the companies that the index tracks. That’s a misunderstanding of how the markets and index funds work.
>I don’t know how I could work in any of these military industry companies.
You'd sing a different song quite quickly once the threat stops being abstract as you don't get to free-ride on the security a defense industry provides.
The defence industry that would be required to prevent an invasion of the US mainland is at least an order of magnitude smaller than what currently exists to sustain the US empire.
I wouldn’t, but thanks for the reply. I’ve gone through conscription and we are neighbours with Russia. I’ve not lived a day in my life without existential military threat.
Replace "war crimes" with "hardware" and it's an equally good reason not to invest.
They're valued like software companies, but they have terrible margins compared to software. Investors haven't figured out how to value these companies.
Because I don't really trust any of them, and I don't believe that the business is self-sustainable. At the moment we're in a phase where CTOs are able to withdraw money from the corporate bank accounts to be "on the cutting edge", but I don't think that's going to last. I'd rather have my money in something else.
Index funds adjust based on performance of the underlying stocks, so it doesn’t really matter if one of them does poorly. The index fund will adjust. When you buy an index fund like the S&P 500, you’re taking a position that the mega-caps it comprises as a whole will give you outsized returns over extended periods of time.
And they "only" need about 100 million recurring subscribers at $200 per month to make the profits that will justify their nearly $1 trillion valuation with almost no room for growth whatsoever, so who wouldn't want a chunk of that pie. (numbers calculated on back of imaginary envelope)
For those commenting that this decision may have a political element: Greenland is a part of the Kingdom of Denmark.
Musk is a prominent Trump/MAGA supporter, and Trump has threatened to annex Greenland by force. SpaceX is part of Trump's Golden Dome project, and one of the reasons that Trump wants Greenland is to site ICBM detection and interceptor systems.
> Nothing is stopping the US from deploying those in Greenland
That would require the (politically unlikely) agreement of the Danish government. See article 2 of the relevant treaty [1]:
"...establishing and/or operating such defense areas as the two Governments, on the basis of NATO defense plans, may from time to time agree to be necessary..."
> The only reason Trump wants Greenland is he's not all there -- Greenland looks big on the map so he's fixated on it.
I agree that that is part of it, but there is more to it than that.
Why wouldn't Denmark agree? Danish and Greenlandic politicians have reminded the US several times that more bases can be established under the terms of this treaty.
So, you're saying the US (300+ mln, #1 military) never actually requested to deploy them and Denmark (5 mln) never actually refused. But because you think an agreement is unlikely, it's straight to annexation by force. Do I have that right?
No, I'm saying that new military installations would be unlikely to be agreed due to domestic political sentiment. Pituffik was certainly agreed by both sides, but that was a long time ago.
(I'm not Danish or Greenlandic, so this is just my reading of the situation.)
You are reading wrong, and should maybe stop chiming in on stuff you have no idea about. An active agreement about US basing on Greenland exist, and has existed for a long time.
I am waiting to see if the same outrage will be in place when Anthropic and OpenAI go public. This surely isn't just a dislike of a certain individual, is it?
Musk chose to make the political aspects unavoidable but I don’t think anything related to major investors’ reactions to one of the most hotly awaited IPOs here is primarily a political move. I’ve been on HN for a while and people here have always had a soft spot for SpaceX — there are probably grown adults now who were born after their parents were speculating about the company here! — and the valuations of SpaceX and Tesla have been the topic of discussion for many years, too. Toss in AI and X and it’d be more surprising if it wasn’t getting a lot of chatter.
Political tribalism wearing a mask of financial news. There are many pension funds and many large companies with valuation problems. Plenty of them in the tech sector. Everyone involved in propagating this story understands the political move they’re making.
Personally if anyone cares my take is that our economic problems are basically structural and geometric at this point. DC is a circus of people tasked with solving them and with the general competence the process selects for, the problems are in a practical sense unsolvable. So instead we get the tribal war spectacle over who holds the pen. Meanwhile the problems sit on the desk with a blank in the answer space.
The criticism seems politically motivated. Considering what happened to Blue Origin, SpaceX's success is commendable. Although I agree $1.8T seems crazy.
I don't think it's politically motivated at all. My impression of this IPO is that it's designed to inflate SpaceX's perceived value by offering very limited float and aggressively seeking to capture passive money by bargaining for inclusion in indices it would not otherwise be eligible for. Speaking as a passive investor myself, I want my money nowhere near this company until it meets the old eligibility criteria.
Why do people believe SpaceX is trying to democratize space flight? Thats demonstrably false if you actually listen to the things Elon says. He wants to go to Mars so he can setup the equivalent of the racist gated community he grew up in. That way he and his rich friends can escape there once being on earth is no longer tenable.
If the space economy expands + if spacex continue to hold market share + if it can do so while increasing profitably against increasing competition in the future. And considering the argument is for "the most valuable company", if spacex can do all of the above while other non-space related companies that are hugely profitable slow down their paces of innovation, spacex could be the most valuable company ever.
The SpaceX S-1 contradicts your claim by including an optimistic "TAA" (total addressable market) figure for "the space industry". Which falls heavily short of your claim. While the SpaceX claimed total TTA is mostly (like 80%) AI-powered "enterprise applications" which don't exist and are not related to space data centers or whatever.
Also, starlink is stupid as a long-term play. Do you really think tossing satellites up into to space and replacing them every few years is cheaper or more sustainable than just building out wired infrastructure on the ground that can be used for decades? Plus, the is a finite limit to how much they can scale based in physics.
The "space economy" is not yet a certainty, other than in the mind of science fiction fans. (Unsurprisingly, hard to reach irradiated rocks of undifferentiated boring minerals in a cold vacuum are of negligible value to humans here on Earth.)
Even if the Star Trek utopian future materialises, it is very likely to be a long time from now.
1. SpaceX has competitors. Most are making reusable rockets.
2. SpaceX has no moat.
3. The concept of money itself might change dramatical by the time SpaceX becomes a multi-planetary mega corporation. Investing now may not return returns in any meaningful sense.
True, and that's exactly the reason why people want to buy this stock now.
If future returns were already (almost) certain, they would have been priced in and you couldn't make any money with this stock.
This is a classic high risk / high reward stock. IF the space economy takes off you might 10X your investment. If it doesn't, you might lose most of it.
Rich people (who own most of the stock market) can afford to make such high risk bets, because they can afford to lose the money and thus many will make that bet.
While the Starship project may be struggling, Falcon 9 is still a massive success, with a successful launch every couple of weeks, making up most of humanity's access to space/LEO right now.
And Starlink is a pretty big deal, particularly in a time of conflict where undersea cables are very vulnerable.
If Elon hadn't shifted so far to the right, these threads would be near-universally praising SpaceX despite Starship's struggles.
Falcon 9 is a serendipitous technical success for a rocket that wasn't designed to land and be reused. It is an operational success. Whether that makes it a financial success is very questionable.
Starship is meant to answer all those questions about design intent and financial viability and then some. It could readily turn out to be an example of second system syndrome.
A symptom of his fickle nature and erratic behavior, as well as general poor impulse control, all of which rightfully make people skittish with their money and question his judgment.
I dont think he was fickle with this one. He was remarkably consistent.
He had period where he though he can become hero for the democrats due to green cars. It did not worked, neither democrats nor left accepted him as unconditional hero.
The racism, the villingness to cause harm to get more power for himself were there whole time. He was far right the whole time, just became more extreme and open when it stopped being disadvantage.
He also loudly proclaimed support for trans rights and called out people on Twitter who didn’t, as well as other progressive issues. It wasn’t just “green cars.” So either he was just being a cynic/lying, which is bad. Or he suddenly became a bigot, which is also bad.
But it’s at the whim of someone who I think nobody can describe as stable or trustworthy. Starlink the technology is great, Starlink the company has a massive weight attached to it.
Interesting definition of "struggling", as in "managed to catch the largest booster rocket ever built with by snatching it mid air, and land the largest space ship in the ocean using a belly flop maneuver that everyone said was crazy and would never work".
The 'struggle' is that they seem to have regressed from that point, and that the scale of Starship is perhaps too big for a 'fail fast, iterate rapidly' approach.
Especially now that every failure results in a massive wave of negative publicity
It doesn't matter if it's successful or not. Their space business is worth virtually nothing on paper and the funding structures and profit/loss accounts are scary.
Most of the 1.8T hype is not at all related to the rocketry business. Well, I suppose if you buy the "AI DCs in space" pitch they could be somewhat related.
What's political is a policy change to "fast track" companies into the Nasdaq 100. Spacex is the first to benefit from this loophole that allows them to be added to indexes almost immediately after listing, which likely is a license to steal a bunch of regular folks retirement money. Elon Musk doesn't need more ways to steal people's money.
The unfortunate thing is, a lot of people have no idea this rule change has gone into effect, and that they're about to get fleeced by a bunch of professional investors.
It's legalized theft, and the victims are people least able to defend themselves from it. Most people have no idea what's in their retirement accounts, or track very closely what's being tracked by the index funds they've been told for decades was the safest way to invest in the stock market for non-pros.
>Akademikerpension also said the governance structure of SpaceX was "extremely deficient", adding that Elon Musk is expected to control more than 80% of the voting rights while simultaneously serving as chief executive officer, chief technology officer and chair of the board.
I think you'll find the whole valuation of the S&P500 is built upon retirement accounts. Yours. Mine.
In other words, look one level deeper and you'll see it's not the S&P500 that's overvalued. It's you and me and 100 million other people desperately attempting to make sure young people pay for them for 20-30 years when they're old.
And then you calculate it out ... and see it's not happening. No matter what the number on the account says.
Zuck was in roughly the same position and they didn’t put out a statement skipping that IPO. The valuation criticism is more valid but this line belies political motivation.
More than 10times higher (possible valuation), 10+ years of Musk showing what kind of liability he is and at that time Zuck didn't have all the main CxO positions.
Google too, and this was in the long term best interests of shareholders.
Imagine in 2010 if investors had real transparency into how much money YouTube or Maps was losing, along with the governance structures to enforce their concerns.
Musk appears far less predictibile, more volatile than Zuck. Musk also got directly involved in US politics aligned with of a man who singlehandedly butchered US relations with almost everyone in the world. A man who threatened Denmark with taking their territory by force.
You’re calling it “political motivation” as some sort of blind hate or vendetta out of principle, cutting off the nose to spite the face. But you can no longer separate Musk from politics and aggression towards Denmark.
The pension fund’s assessment looks entirely valid, objective and justifiable to me. But for anyone who personally favors Musk and his political views any dismissal will look politically motivated. It’s easy to cry foul. In this light your shallow dismissal might be just as politically motivated.
The political motivation is on Musks part. There's no unpolitical view of a man who ransacked the US government and is propping up far-right movements all over Europe.
There's a lot of it. But I also see a lot more skepticism of Musk and the rest of the intellectual dork web. Flirting with fascism was edgy. Now it's just icky.
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:
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.
"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.
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.
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.
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.
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.
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.
I have AkademikerPension as my pension fund through work and this move suits me quite well. They've already excluded Tesla as well as a variety of companies that profit of weapon production, fossil fuel production or are suspected for human rights violations.
https://akademikerpension.dk/ansvarlighed/ekskluderede-selsk...
In Norway the oil fund are actively arguing against boycotting these kinds of companies saying, and I paraphrase: "but our job is to earn money and we can't do that if you hippies keep standing in the way with your morals"
Good to see it isn't necessarily the case.
For some context, this Norwegian cartoon by a group that used to make satire for the government run news agency is a pretty decent summary of how things were discussed: https://www.youtube.com/watch?v=9mkuP6kQwNs.
The old man is a caricature of Jens Stoltenberg (who seems to be running the Norwegian economic machine rather well nowadays, controversial or not)
> our job is to earn money
Which is exactly why you wouldn't put it in a company with a ridiculous valuation.
I don't know the AUM of this pension fund but if the managers were doing their jobs they should have had at least a tiny bit of exposure to SpaceX years ago.
If you want to make money, buying SpaceX stock isn't the way to do it
This is about valuation not ESG
The sovereign fund of Norway also researches a lot of the state of the companies and then invests into the whole market vs the ones they dont consider good according to some metric. Sounds like this Danish example.
Yeah, there is lot talking out of both sides of their mouth here.
If nothing else, at least these should be choice of users to let them choose based on their values and requirements.
By who exactly ?
The pension fund is the user of the stock here.
Pensioners should get the same amount regardless of investments, as long as there is enough funding, which it seems there is for the moment.
Of course, if someone wants to risk their own money, they can invest in whatever they want. They can even sell their pension for a cash lump sum and invest that.
It's maddening how quickly ESG and similar programmes have been thrown in the dumpster once the political climate in the US swung back to "anti-woke".
> "but our job is to earn money and we can't do that if you hippies keep standing in the way with your morals"
What these clowns conveniently forget is that their job is not just "to make money" but to make money over a span of decades and centuries in the case of the sovereign funds. A long term investment fund that optimizes for the next quarter at the expense of the long term is a bad fund.
And so the ESG and woke "hippie bullshit" is nothing more than the basic capitalism of maximizing your gains by 2100 by not destroying the one planet all your companies are on.
Long term funds do not have the luxury of being passive owners. If they take no role in management, that role will instead by taken by whatever short-term owner walks in next. They don't care about the value by 2100, they just want the company to tear the copper out of it's own walls so they can sell with a profit by next quarter, retail even sooner.
How is Tesla destroying the planet? In my mind, Tesla is one of the most important companies in transition to clean energy. Yet it got dropped from the S&P ESG index.
ESG is just another phony way for someone to manipulate stock prices, because it's decided by some committee with arbitrary and opaque ways. And that's why no one takes it seriously any more.
That’s exactly what you would want your money manager to say. It’s their job to turn a profit.
In turn you also want democratically elected politicians above that saying “yes, but the people want their money made ethically, so you can’t do that”.
> That’s exactly what you would want your money manager to say. It’s their job to turn a profit.
The job of the police is arresting people who break the law, but similarly to your money manager, you really don't want them to do this regardless of anything else, there is more things to consider than just "do everything you can to arrest people", and hopefully the same for your money manager. But also, I might be too European to understand the true value of "money grow regardless of society cost at large".
Of course, some back-and-forwards is healthy.
In a good system both sides fight for their interests, and the outcome is some middle road compromise that optimizes for everyone's benefit.
sorry, but i wouldn't want my money manager to attempt to engage in unethical or illegal practices in order to turn a profit...
The point is that it's the job of the democratic legislature to codify what you just stated here into law, so that all money managers have to abide by this standard, not just those that have a personal conviction for it. That's the essence of rule of law.
You can't have a functioning government if it's elected by a corrupt society. Exhibit A, current US situation.
The fossil fuel part doesn't seem like a rational decision to me.
Why are we pretending that fossil fuels dont provide an immense amount of value for humanity, and that its horrible to invest or support building out any fossil fuel production whatsoever.
Lets not do produce it ourselves, lets just instead outsource it to the gulfs and Russia…
Nobody is pretending fossil fuels are not producing value, if they did not nobody would bother using them in the first place. The argument is about the fact that they produce relatively short term value for the person using them, at the externalized expense of polluting the atmosphere and causing long-term environmental instability and destruction for every subsequent generation for the foreseeable future. Coastal regions (and whole islands like the Maldives) disapppearing under the ocean is immense and ongoing value loss for humanity. Ocean acidification destroying marine ecosystems is an immense and ongoing value loss for humanity. More frequent and more extreme hurricanes is an an immense and ongoing value loss for humanity. And on and on...
I think a lot of people actually dont realize the value it gives humanity. Lots of people think we would have been better of in an alternate universe where we never discovered oil & gas.
How is this short therm value for people using them? They are drivers of the most fundamental stuff in our day to day lives. Either enabling billions of people cheap efficient transport, efficient agriculture producing cheap food, cheap and efficient global shipping of goods, a great portable and ajustable source of electricity.
I think as of now its a question on how much you are willing to sacrifice human welfare over preserving current nature/environment. Extreme weather has largely been solved for humans, the trend is still less death and starvation caused by extreme weather, we are immensely adaptable and resilient.
Im not sure our current pace of reducing emissions is that horrible. There are reasons to why it takes time. I might be too optimistic, but I think we will largely solve human issues. Nature as you point out, im worried about, although I know less about. And its hard to quantify what the value is for us.
If oil and gas would not exist, then liquid fuel would be produced from coal. With the latest processes the cost of production is like 80 dollars per barrel, but with processes that Germans developed during WWII it was probably like twice of that in modern money.
In alternative universe that would be cheaper due to massive scale, but the era of very cheap liquid fuel would never happen. So electrical cars on big scale will happen much earlier. And given that coal is much more evenly distributed on Earth, one can speculate that there would be much less reasons for conflicts.
I dont think this makes sense, given how insanely much more polluting coal is. You have to burn massive amounts of coal to power the liquid refinery, 50% of the energy lost essentially in the conversion process. In addition to that liquid coal has double the emissions of regular oil. Air quality would have been a disaster.
EVs in scale would have maybe happened sooner, but they would have give us much less value, and I think in the end reaching current EV tech would most likely have taken longer than it did with oil and gas, just due to industrialization and technological innovation would progress much slower without oil and gas...
I think advanced green tech in general would have taken much longer time to develop also on an industrial scale when limited by coal only. Not to speak of human welfare would also have improved much slower.
> Air quality would have been a disaster.
What do you mean would have been? It was a disaster. Perhaps you are too young or insufficiently well travelled to have experienced the effects of burning coal in, say the UK in the 1950s and 1960s or in China even in the last few decades.
Without oil the push to solar and wind would also have been accelerated, probably.
What is it about oil and as that you think made it accelerate semiconductor R&D?
In 1920 in Berlin there were more electrical taxes than gasoline one. But cheap gasoline killed electrical car industry.
Without that electrical cars would proceed to develop and batteries with high capacity would happen much sooner.
As for pollution it would not be that bad. Fuel would be expensive and cars with combustion engines would not happen on massive scale. There would be much more freight by trains and nuclear energy would be developed on much bigger scale.
> I think a lot of people actually dont realize the value it gives humanity. Lots of people think we would have been better of in an alternate universe where we never discovered oil & gas. How is this short therm value for people using them? They are drivers of the most fundamental stuff in our day to day lives. Either enabling billions of people cheap efficient transport, efficient agriculture producing cheap food, cheap and efficient global shipping of goods, a great portable and ajustable source of electricity.
People who oppose the fossil fuel industry do not suggest we return to the 17th century tomorrow. They suggest being less wasteful with the resources we have (nobody would die from eating lentils instead of beef, even though this would cause 98% reduced CO2 emissions) and investing in alternative solutions that achieve similar outcomes but cause less harm to the environment. Some things being more expensive or less convenient would not be a global humanitarian catastrophe, and since you strongly believe humans are immensely adaptable and resilient I think you would agree we could adapt to this as well if working together.
> I think as of now its a question on how much you are willing to sacrifice human welfare over preserving current nature/environment.
No, it's about how much you are willing to sacrifice the quality of life of the current generation to preserve the quality of live of subsequent generations. The worry about causing instability in the environment is not an aesthetic concern about the purity of nature being lost, the worry is that such instability will cause real and tangible death and suffering for real humans and have long term negative consequences for future generations.
> Extreme weather has largely been solved for humans, the trend is still less death and starvation caused by extreme weather, we are immensely adaptable and resilient.
You will have to provide some better source than your gut feeling and a cheerful attitude for me to believe you on this over the countless of people who have done actual analysis and vehemently disagree with you. Just a single example to get you started:
"This report’s projections of morbidity and mortality from climate-intensified natural disasters, cumulatively close to 15 million deaths, more than two billion healthy life years lost, and $12.5 trillion in economic losses by 2050 bring into focus the dimensions of the crisis. The risk from global warming threatens to destabilize both the healthcare ecosystems and the planet. [1]"
You claim to be against irrational decisions, but seem to base your "rational" view on very simplistic analysis about economic value always being good and the 17th century being bad, combined with a scoopful of wishful thinking.
[1] https://www3.weforum.org/docs/WEF_Quantifying_the_Impact_of_...
> Lots of people think we would have been better of in an alternate universe where we never discovered oil & gas.
Who? Other than strawmen, I mean.
Man, come on.. There are even at least two comments from people in this thread arguing this exact point. Ill promise you its frequency is even higher in the real world than on HN.
You must not be very much exposed to the environmental movement, or be much online, if you havent seen this.
The fossil fuel industry is both the most subsidized industry worldwide (https://en.wikipedia.org/wiki/Fossil_fuel_subsidies) and the second most expensive source of energy (at least for electricity production). The only energy source that is more expensive is nuclear (!).
The second most expensive source of energy is misleading in terms of whole picture. They are using a theoretical cost per kwh generated. You have to account for the much higher infrastructure and systemic cost of electricity generation you can not control (wind/solar). You cant simply use wind or solar without pairing it with an controllable source like hydro, gas, coal or batteries. Which is why the world is still very much using gas and coal (and still building more). Renewables are a cheap and good supplement to these sources, you just cant replace them cheaply (yet).
Regarding "the most subsidized industry worldwide", this wikipedia article does not mention any tax revenue and taxation of these companies. Which are stil very often government cash cows and often pays much more taxes than other corporations. The subsidies are straight to citizen's gas tanks and heating bills.
"Subsidies are mainly on consumption,[3] such as a lower sales tax on natural gas for residential heating; or subsidies on production, such as tax breaks on exploration for oil."
In my country Norway for example, we have tax breaks on exploration to incentivize investment in exploration, but you have to take into account that these companies have an 80 corporate tax rate! In many petro states they are straight up nationalized companies.
It is a tricky situation isn't it? We wouldn't have gotten where we are without fossil fuels, but now we realize they are not sustainable to be dependent on and we cannot continue this level of growth. I don't think it is actually possible using current means to power what we have come to know as a "first-world lifestyle" for the majority of the planet.
Thats not true. We don't know if we would be able to be were we at.
There is also no value in this. If we owuldn't known about progress through oil and gas, who would say that we would be unable to get to the same point just a 100 years later?
No own would be hurt if we would have achieved this 100 years later but healthier.
It was also ignored on purpose. Oil companies knew very well, researchers knew. Apparently there were big demonstrations here in germany in the 70ties so our parents knew too.
Life came inbetween apparently.
And from a pure calculation point of view: Its actually very easy to switch over to renewable. As of today, we do have everything we need.
The only thing missing is people doing it.
And just to be clear: it would repay itself.
How would we do the whole industrial revolution thing on whale oil and lumber? Whales would most certainly be extinct by now, thats for sure.
100 years later is an immense amount of extra human suffering, not to say that reaching current level would most certainly take much much longer than 100 extra years.
Im sorry but this whole tirade is just delusional. Its cheaper and better to replace all use of fossil fuels with renewables? Why are we not doing it? Waiting to here your grand conspiracy as of why people are not "doing it".
Why did china build over 50(78GW) new large scale coal plants last year when they could get so much cheaper renewable?
Would you say the same thing about human suffering if the bronze age was 100 years later? And what about all the suffering and deaths from the pollution? Or the massive global wars fossil fuels enabled? Because without massive oil and gas reserves both WWI and WWII would have been far harder to sustain or commit to in the first place.
With such a massive shift in politics and technology with a lack of fossil fuels I think it is near impossible to compare the modern world to a world without those.
Because people didn't care that oil and gas is breaking our planet 100 years ago. Or didn't knew and capitalism made the people in power very very rich very fast.
At that time we still lived and heated normally. For sure the brits destroyed a lot of their trees but you know? They could.
What do you think would have happened if we had a small population collaps at that time and HAD to consume sustainable? We would be less people for sure, but we wouldn't have killed the missing people, they would have not been created in the first place.
We created the first solar panel 1883. The first EV in 1884.
China is still using coal because they are in the same dilemma as we all are: we ignored the impact and keep the status quo. But China build a lot of coal plants for renewing aging ones and they are massivle building out solar.
So why are my neighbours not doing it? Man i talked to sooooo many people about this, are you ready? Because people don't care. Or they don't like new things. Or they don't understand why it would be better.
Yes thats the conspiricy. People can't do the math, don't care about climate change or just don't want something to change.
Everyone i know who has solar panels on the roof, a small battery and heat pump literlay saving money and would never switch back. Every single one of them.
The Industrial Revolution started in 1760-1800 and was driven by coal, completely replacing wood as the primary industrial fuel. We almost exterminated whales and deforested the entirety of Europe before discovering fossil fuels, which both bounced back after.
The first EV an the first solar panel are second order effects and only possible because of the industrial revolution driving massive human innovation and growth. Good luck reaching the levels of industrialization and tech required to mass produce solar panels by using wood. Producing 1 ton of charcoal from wood, requires 4-7 tons of wood. To smelt a single ton of iron you then again need multiple tons of coal. Good luck industrializing without turning the whole planet into woodchopping and wood planting farm. It was all made possible by fossil coal, oil and gas.
Everything is essentially downstream of industrialization enabled by coal and subsequently the superior oil and gas.
And saying that oil and gas was breaking our planet doesn't make sense, if anything these are great replacements of coal.
You are also diminishing the brutal life of pre-industrialization times. Staggering high child-mortality rates, low life expectancy, and an high amounts of deaths caused by starvation and extreme weather events, like droughts and floods.
Solar plus battery takes many years to be paid back. If this setup is actually cheaper, industrial scale solar+battery would be huge. Solar on its own is a great cheap pairing with stable energy sources like hydro, gas and coal, which is partly why china is doing this.
People do actually adopt green tech when it makes financially sense, just look at the huge boom of adoption of AC and heatpumps around the world. Because it massively reduces electricity cost of heating and cooling.
Its not because people cant do math.
It’s more about trying to help the cleaner energy sources get off the ground, rather than a purely financial incentive.
How much extra investment to you think green tech companies get for pension funds excluding investment in this sector? They also only invest in publicly listed companies, not green startups. To me it seems like the exclusion is based on them viewing it immoral to invest in these companies..
I think the right way to go about this is to tax consumption of fossil fuels in countries where we can afford it and use the money to subsidize green tech/industry.
If it's so valuable why don't you want to buy it from the Russians and the Gulf?
I think Europe happily buys from the Gulf currently, and reluctantly buys from Russia if they have to.
Its more about being self sufficient. This is something that can easily be weaponized against us. E.g. Russia using Europes own money to finance their invasion of Ukraine.
We do want to buy it from the Gulf. It’s just that a certain country started a certain war and this is now off the table.
The slavery part doesn't seem like a rational decision to me.
Why are we pretending that slavery doesn't provide an immense amount of value for humanity, and that it's horrible to invest or support building out any slavery production whatsoever?
Lets not do produce it ourselves, lets just instead outsource it to Africa...
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Snide comparisons aside, I'd just say that we can accept that fossil fuels played a gigantic and important role in getting us to where we are, and also acknowledge that we'll continue to need fossil fuels in the near future, but that does *not* mean that we need to accept that investment in even more expansion of the fossil fuel industry is a good idea.
Slavery is evil. Fossil fuels is actually still a net good for humanity. E.g. the consequences of removing access to these energy sources, would be overwhelmingly more negative for humanity right now, than the consequence of global warming.
The transition is moving ahead, it just takes time, and we need more technological breakthroughs and innovation. Trying to attack production instead of solving demand, can cause serious consequences, in which the poorest countries in the world would suffer the most.
Oh sorry, I forgot to look at my D&D alignment charts before making my comment, I didnt realize that slavery was evil and thus impermissible. I guess there's no possible comparison to be made with other economic practices that cause massive harm to some people, but benefit others in the short term.
For the sake of argument though, what if we lived in a situation where a very large portion of our agriculture, and other vital forms of economic activity were reliant on slavery? What if there were alternatives, but they weren't quite as economically entrenched, and an overnight banning of slavery would cause an economic collapse that'd cause large scale suffering.
In this hypothetical scenario, would we say that slavery is a net good for humanity? Wouldn't it be okay for our pension funds to invest in more slave production?
I just find it so funny how this person is willing to use completely different ethical frameworks in the same sentence when talking about slavery, versus when talking about fossil fuels.
With fossil fuels, we go and start talking about 'net benefits', and we're willing to accept some catastrophically bad effects in order to reap some benefits, but then when the conversation is about slavery suddenly we switch to toddler ethics of "that's evil." without any consideration for weighing the positives and negatives.
Fossil fules is not a net good for humanity.
We have everything to switch over and while we do nothing more and more people are affacted by it daily and in longterm.
co2 is in the athmosphere for a long time.
In the only world were this is true, is a purely capitalistic society which values poorer people less.
Doesn’t one major fund reducing investment in fossil fuels and increasing investment in renewable energy precisely migrate towards the notion of helping solve demand and encourage technological breakthroughs and innovation?
I think the right way to go about this is to tax consumption. The most efficient one would just be a co2 tax, to not favoritize some emission over others. This is mostly fine in western rich countries, and we already do this to some extent by putting extra taxes and fees on petrol, carbon emissions and stuff.
Becoming reliant on countries you dont want to be reliant on, and pretending we dont desperately need this to get the wheels turning is a strategic blunder.
Higher global fossil fuels costs have strong negative effects on peoples welfare, especially in poorer countries. Whenever we get high oil/gas prices, we get price jumps on artificial fertilizer, food, transport and energy. Everything gets more expensive. Its straight up national emergency when something threatens supply of oil and gas in many of these countries when we get events like closing of the hormuz strait.
> I think the right way to go about this is to tax consumption. The most efficient one would just be a co2 tax, to not favoritize some emission over others.
I too thought this for a long time. But after watching taxes on consumption basically be a non-starter in the US for a long time, I’m not so sure anymore. Gas taxes are also regressive, which means the people who feel it the most are the ones least able to pay it. Raising the gas tax while retaining one’s elected position is challenging in the US to say the least. In most places in the US, driving is not a luxury.
To be clear, I think we need to move off of fossil fuels to the greatest extent possible as soon as possible. For those with means, it is a great moral failing to continue to drive a gas guzzler and heat one’s home with fossil fuels when there are better affordable alternatives. I’ve been driving an EV for nearly four years; it is now not just more affordable than a gas powered vehicle, it is more convenient. For me, the cherry on the top is that I also do not pay for electricity, because I took advantage of the pre-Trump II era solar tax subsidy and built a massive one.
The tax break was good for me, and it’s a shame that is gone (I paid off that panel in 5 MONTHS with the help of the subsidy), but tax breaks really only help the relatively wealthy. We need an investment in infrastructure for the masses to break their dependence on fossil fuels. I’m not really sure what that is.
As a Norwegian I envy your ethical pension fund. Our Norwegian pension fund goes by the name the oil fund, and was financed solely by fossil fuel production.
Defensive weapons are very much needed in Europe…
The new asymmetric reality is mostly short/medium range drones, ECMs and hypersonic missles. Loitering munitions are going to make tanks mostly obsolete and Jets are too expensive to risk over enemy territory that still has working radar/anti-air except for large shock&awe actions.
A lot of this stuff is hard to stop and too cheap to effectively stop economically anyhow, the best solution is distance and preemptive strikes at staging areas.
Indeed, hence most European defense companies experiencing somewhat incredible growth recently, with no signs of stopping.
Do we need Americans weapons? Unlikely and probably counter-productive long-term. Do we need European weapons? Hell yeah!
No they are not.
The amount of military spending europe has, is already higher than russia.
Russia clearly showed how incapable they are, they are not even able to present modern war technology at their freedom parade.
And china we don't fight china.
we have about 30 years of catching up to do, better defense spending:
1) Saves our lives in Europe, by having access to better training and force multipliers.
2) Seeps into the economies of every country in the union through research spending.
Defence is unambiguously a good thing, it becomes a problem if you put an expansionist cunthead at the helm of it.
We can discuss if a society should have a certain amount of GDP invested into defense and i'm not necessarily against it.
I would think educating people properly is good, I also think the swizz model is good in sense of everyone learns to handle a gun and can have it at home (as long as high security standards are set and its taken very serious).
It could be used as a tool to strengthen societies responsibility, communication and combined with what the THW is doing (technical help org).
But my statment is still true:
We do not have to catch up. We are absolutly capable of defending ourselfs against the current biggest threat which is Russia.
While I support the individual right to keep and bear arms, it's ludicrous to think that a few assault rifles in private hands could ever be effective against drones. There has been a revolution in military affairs in just the last few years. The game has fundamentally changed.
I think that's less true than the media would have you believe.
We're undergoing a lot of propaganda about how effective Ukraine is against Russia, but that's despite most European countries practically immolating their own stockpiles of defence capability, and they're doing so somewhat unoformily (while Russia does everything they can to weaken the European homogeneity; see their funding into brexit and anti-EU seniment spreading bot farms on social media).
It's definitely not a given that we can stand up to Russia with our current capability, and it's also the case that we'd be throwing human capital at the problem because we failed to adequately invest.
I spoke to one person from Ukraine who was enlisted, he mentioned he was waiting for something from the UK, I asked how long does it normally take.. he told me that he doesn't measure time in weeks, but how many of his friends he he will lose.
.. that hit me hard, and it made me consider who incredibly naive and coddled I was to believe that investing in military or weapons things is a "right wing" or "bad" thing.
War always seems so far away until it's on your door.
Its not propaganda when you can see it. We know what Putin showes in his Military parade and we know the stockpile of tanks they have and had due to satelite images.
My statement still stands, we do not need to increase defence spending to beat russia.
You said something different though: "We need to increase defence spending to have as little as human risk as possible".
I wouldn't call it naive, more optimistic. And even before Ukraine, we do have military. EU has high tec military.
Even before Ukraine, the EU spend more in military than Russia.
And regarding resources for Ukraine: We do fight a proxy war. We are not fighting Russia directly. This means some people don't want to spend money and resources on this, we are nog aligned across europe and it is always very unclear how and how much we help. This would look differently if russia would declare war against the EU.
It's not so much a matter of spending levels but what you get for that spending. Since the end of the Cold War, most European countries have treated their militaries as essentially government jobs programs. The money was thrown away to hold down unemployment, and any combat effectiveness was incidental. The current crisis is finally forcing a change in that mentality but it will take years to turn the situation around.
In nominal terms "we outspend them" is true, but it misses the forest for the trees.
Nominal spend is the wrong yardstick when one side builds at home for a fraction of the cost; Russian labour, steel and energy are far cheaper at the point of use, which is why PPP estimates put their real military output roughly level with the whole of Europe combined.
And spend isn't the binding constraint anyway: it's production. A budget line is not a full magazine, and we've spent years throwing our stockpiles into Ukraine while letting our shell and propellant lines wither instead of refilling them.
"We don't need to catch up" assumes the money on the page is already steel in the field. It isn't.
Given the Russian threat to Europe and the fact that we are actively sending arms to Ukraine, investing in manufacturing arms doesn't seem like an imoral thing to do. Quite the opposite.
IANAeconomist but may I ask, tongue firmly in cheek, if they also only pour water into the shallow end of swimming pools to avoid contributing drownings?
How does Tesla fit with the rest of those?
I'm not a huge fan of Elon Musk but Tesla is a company that produces electric cars (mostly in western countries with half-decent labour laws), it's not associated with any of those things.
I guess one could argue with some merit that the governance is bad enough to exclude it on that basis alone?
Agreed - Tesla has been an insanely good investment. I'm not sure about the next 10 years, but people have continuously underestimated them (and Elon Musk). The Norwegian so called Oil Fund owns more than 1% of Tesla.
Tesla is not and never has been a good investment.
Its a gamble.
The current evaluation of Tesla is still higher than real car companies + robot companies + robot taxi companies.
Fair enough I guess, it has been a gamble. But risky investments are still investments that paid off well. Or they can drop like a rock.
Never is a strong statement. Tesla’s price to sales ratio wasn’t absurd prior to 2020.
If you want to make sure to be very very specific, yeah for sure Tesla had a timeframe were the ratio was not bonkers.
has it been an insanely good investment because of changes to profit and loss, or because of other factors? (of course, building a car company of the scale they have is impressive. But by looking at tesla's financials vs stock price, youd conclude basically any other car company ever was a great buy by any reasonable metric)
"Danish pension company Akademikir Pension has announced it will divest from Tesla due to ongoing concerns about labour rights, corporate governance, and Tesla CEO and co-founder, Elon Musk's behaviour."
https://www.europeanpensions.net/ep/Denmarks-Akademiker-Pens...
Tesla has a P/E wildly out of line with the rest of their sector and is facing strong competition with a largely absentee CEO who has a history of making very bad decisions over the objections of more skilled staff (politics, of course, but also things like how the Cybertruck is so expensive to make and own). At some point that bubble is going to pop so I can understand a pension fund being more focused on long term returns passing on them.
Europe is still a democracy and while its apparently not relevant in the US America, Elon Musk as the richest person on the planet directly tried to involve him in europe elections.
In a liberal society governed by laws, increased scrutiny must follow evidence of wrongdoing, not mere association. If European countries have problems with Musk’s conduct (lord knows I do) they should either pass legislation targeting behavior he has engaged in that is not already illegal, or charge him with a crime/bring a civil suit against him if he has violated existing law.
To be clear, this has already happened to some degree. See Paris prosecutors investigating him for the distribution of child pornography. But targeting companies he is affiliated with for his personal behavior violates the principle of the generality of law.
Tesla is known for hazardous factory conditions, worker mistreatment etc.[1]
Then there's the autopilot misleading marketing, Cybertruck being glued together with spit glue and duct tape etc.
1 - https://en.wikipedia.org/wiki/Criticism_of_Tesla,_Inc.#Worki...
You might want some of those weapons, once our faithless, perfidious country (meaning the USA) decides to leave you to the Russian wolves. Don't depend too much on alliances.
And where would Norway be without fossil fuels, exactly? That's basically the sole source of your nation's wealth.
As for Tesla and other companies led by Elon Musk... well, yeah, F that guy. But don't throw the proverbial baby out with the bathwater.
I wanted to see how well Akademikerpension has done wrt. returns. This graph shows average yearly return from the financial crisis 2009 until 2021 and they are actually the best performing among other Danish pension funds [1].
[1] https://www.finanshus.dk/wp-content/uploads/2023/02/Pensions...
Judging a pension fund by how it performs in a bull market seems wrong. Like their main job is to limit your downside from market crashes (if they're not doing that then they offer nothing compared to an index fund), so its strange to not include 2008 crisis (or .com bubble popping).
Checking this shows that the top 2 performers in this graph lost more money (~8%) in 2008 than the bottom 2 (~2%)
You make a good point, but I think “lowest risk” is also not the metric either. You could buy 100% bonds and be even safer.
You want some risk-adjusted return metric parameterized by average returns and also volatility.
Judging a pension by how it performs in 2008 seems wrong. Like their main job is to perform well over long periods of time compared to other funds.
Checking this shows that 12 years is longer than 1 year, and thus is a better metric.
Ah, time to dump Velliv it seems.
Well, often you don't get to "dump" your pension fund. In Denmark, it is your employer deciding what pension fund to use, and you will then have to use it. It is kinda ridiculous.
I really want a QQQ/VOO replacement that excludes these new rushed IPOs that are just exit liquidity. There are ETFs that exclude harmful industries like gambling, weapons and tobacco. How about an ETF that doesn't include IPOs for six months or until insider lock ups periods are over.
Dimensional runs a bunch of ETFs which are effectively US & world equity index trackers that don’t slavishly follow the indices & can therefore avoid being forced to buy into IPOs or index updates. E.g. DFUS is effectively VTI (IIRC) without the requirement to immediately buy into IPOs that are added to the index:
I don’t think they have a QQQ equivalent but I haven’t looked at their entire ETF list.(I have no relationship with Dimensional, nor do I invest in these funds - I just saw them mentioned in a YT video on this topic a few months ago: https://www.youtube.com/watch?v=mqIHa6URUPk )
I knew that would be a Ben Felix vid. He's awesome.
It's important to note, that whether it's intentional (doubt) or genuine mistake, he's misleading viewers when he says that Dimensional has outperformed other funds or indexes. In fact most of the Dimensional funds have underperformed markets, and they do so at higher (albeit approachable) TERs of 0.25.
There's a (rather short for his standards) video made by Paolo Coletti, professor of financial economy at Trento about dimensional performances.
It's in Italian, but both subtitles and Youtube's auto audio translation works fine.
He always includes data and google colabs so people can run tests and verify numbers themselves if they disagree.
https://www.youtube.com/watch?v=j_tBfYHh1J4
Most of the Dimensional ETFs seem to be following some kind of value investment strategy where they take an index but nudge it a bit by some value factor which is claimed to be based on long standing research. It wouldn’t be surprising if this value factor has underperformed in recent years which have been dominated by the rise of growth stocks. The video you link to seems to be talking about these ETFs, although I haven’t dived into the numbers.
As far as I can tell the straightforward US & world equity ETFs I’m referring to above don’t have this value bias.
The value ones mentioned by Felix do.
In the video I linked Felix only talks about DFUS, which has no value tilt.
He may talk about their other funds in other videos, but not this one.
I think VGT is a good QQQ replacement. It is based [1] on the MSCI US Investable Market Information Technology 25/50 Index which is free-float adjusted [2] [3], meaning that SpaceX will have a lower weight due to its lower free float. Also, VGT has a substantially lower expense ratio (9 bps / year [4]) than QQQ (18 bps / year [5]). You can compare VGT and QQQ's holdings on these pages [6] [7].
[1] https://fund-docs.vanguard.com/F0958.pdf
[2] https://www.msci.com/indexes/documents/methodology/2_MSCI_25...
[3] https://www.msci.com/documents/10199/6bafd9e3-0474-f03b-16bd...
[4] https://investor.vanguard.com/investment-products/etfs/profi...
[5] https://www.invesco.com/qqq-etf/en/about.html
[6] https://stockanalysis.com/etf/vgt/holdings/
[7] https://stockanalysis.com/etf/qqq/holdings/
No it’s not. When the asset management industry says “information technology” they exclude the technology used for communication. That’s why VGT doesn’t invest in GOOG or META. AMZN is consumer discretionary so it’s also excluded.
That's fantastic. Thanks! I actually use QQQM which has lower fees. Seems like Invesco pulled a trick from marketing and segmented the market to have it both ways. I also need to find leveraged ETFs that have float adjusted weights which is a bit trickier. I might just pull out of TQQQ until the dust settles.
A long and a short cancel out. So you could construe this yourselves. (Recognise that this has a long tradition on HN ;)
Besides laziness being a tradition among programmers (in a good way), that kind of complex activity is going to generate tax in a lot of jurisdictions.
If you care to explain why, I’m interested. I imagine a situation where large Sum X is in ETF but gets adapted by a few little shorts. It’s still mainly the ETF in the portfolio. (Exactly this is why in my firm some ETFs are deemed too precise, since they are thought to follow the insider knowledge as well.)
Well this used to be the rule until it was changed just a few months ago on anticipation of this very SpaceX IPO.
VTI avoids these issues. It's float adjusted market cap weighted. More float allows better price discovery. So a company like spacex has negligible weight.
So are other major index funds. That's not the problem.
The problem is that the NASDAQ 100 and most likely also S&P 500, change their rules to permit SpaceX to be added early without traditional time for price discovery. It happens jsut five trading days before the major index rebalance.
After float adjustment SpaceX could be 1% of NASDAQ and 0.7% of SP500, but after full tranche escalation that takes over 130 days, SpaceX weight can be over 3% of NASDAQ and almost 2% of SP500 if the market cap stays near $1.5T.
(I think the price will decrease, so the weight will be smaller)
This is just a ploy to get exit liqudity as brikym, said. SpaceX collects enough capital to pay Twitter acquisition loans and then some, but the IPO not major boost for SpaceX finances. The coming merger with Tesla is clearly in the plans (C stocks).
> five trading days before the major index rebalance.
I didn't realize this. That's really scammy.
Musk in a nutshell, but as long as the stock price goes up everyone looks the other way.
Yeah when they crash and burn everyone will be like "how did we let this happen?".
You are making a mistake in equating several things here. Not only is this SpaceX IPO that has latched itself onto pensions through accelerated inclusion in the S&P100 and other funds a different and rather unique matter, but excluding harmful industries is really rather stupid of people who oppose those industries.
If, e.g., all those who opposed those industries had instead bought the industry stock, the people with those ideals opposed to those industries could have at the very least profited from the sale of the stock...which the company itself basically does not see direct benefit from (you are not buying the stock from the company or giving the company any money in most case)...and used/committed that money to even greater opposition. If a catalytic number of those had formed, they could have also even made real impact through shareholder initiatives and actions demanding changes by pressuring board members who rely on votes, etc.
It's one of those nonsensical, moralistic and ...sorry... foolish mindsets that common people have, the idea that simply by not participating the King will leave them be. The psychopathic narcissists in control will never leave you be, no matter how much you virtue signal by not buying their stock from someone else that is not the company or no matter how much you ask or how far you run and beg and ask to be left alone.
Frankly, although I am not certain that it was done intentionally, if I were a major mover and more powerful person, I would propose the very kind of moralizing, self-righteous campaign that has shot the commoners in their feet by getting them to simply check out and not participate in things the could have otherwise controlled a lot more.
So instead of people who actually care...but are clearly rather foolish...all/a disproportionate amount of control and power and money is left to those who do not have those qualms. Hence why none of this "excluding harmful industries" has affected anything whatsoever and we now have square mile measured AI data centers and tens of millions of low climate impact people being moved into high climate impact countries, and we have more war and death and addiction than humanity has seen in 90 years.
In case it is not yet clear to some of us, a stock is like if you went to some second hand/thrift store and bought a brand of clothing that was reviled for some reason or another, i.e., use of child sex slave labor, you giving a thrift store money to wear the second hand clothing not only does not benefit the reviled company, but just alone wearing second hand clothing will likely have more a positive impact than guying some other company's clothing that will later turn out to have used regular child labor.
While not wrong, your perspective is very simplistic. A company gains massively from strong stock performance - they can issue more shares to raise capital, give handouts, take loans at better rate, pursue M&A with stock payment, ... So anyone who buys stock they ethically disagree with is certainly supporting that company - and inversely not using those funds to the advantage of other companies that they find morally more appealing.
The point of these broad ETFs is that they include everything. Let the market decide. Of course they should own one of the largest public companies in the world. They're changing the rules on inclusion because the ipo is unprecedented and not owning it because [reasons] would be a dereliction of their duties.
You want an ESG fund
Also I dont see how weapons companies are harmful. Unless you're so naive to think defense is not a thing any person or country has to worry about in 2026
> Let the market decide... They're changing the rules on inclusion ...
You have the market deciding and the rules changing in the same paragraph and nothing's bothering you. I genuinely envy your peace of mind, my friend. Some of us are truly blessed.
The rules changed because it's unprecedented. It's not complicated. If your job is to "track the market" and there is this company that is worth $1+ trillion, you're not doing your job if you don't have exposure to this company.
Just be honest with yourself. The only reason you and others have an issue is because of politics. You don't like Musk for whatever reason and now you're very opinionated about the internal workings of index selection, when prior to reading about it in the NYT or something, you had no idea.
You don't care about the arcane byzantine process, you think rocket man is bad. I feel bad for people that get so easy manipulated. It's a hell of a way to live your life, waking up and reading corporate media to tell you what you should be angry about today
Ignoring the moral questions, the issue is that the old waiting period had a purpose. The market *isn't* getting an opportunity to decide here. There's a concern that these are a glorified pump & dump where initial investors extract all the value via the IPO and then the price craters once it's on the open market.
It'd be nice to give the market a period of time to figure out what it *really* values these companies.
Doesn’t matter that it’s unprecedented by value, Whole point of rules is confirm that value isn’t fake by letting the market stabilize after IPO and then if value is there, it’s added to the index. Yes, some money could be lost if value is there but reverse is true as well.
Hang on, wasn't the market supposed to work it out? How come it's someone's job to fast-track inclusion? Isn't intervening directly in the market a communist policy? Are you a communist by any chance?
I think their point is not the ESG component, but firms with traditionally irrational valuations (à la GameStop) for which index inclusion exceptions have been made to facilitate short term liquidity for IPO participants. Seems as though one should be able to hold the broad market less that component.
Let the market decide what, though? What the market cares about may be different from what you care about, if the average investor has a higher tolerance for risk that you do. For pension funds, long term stability is key. A wide spread of large companies has traditionally been a good way to achieve that, but that isn’t guaranteed.
> Let the market decide. Of course they should own one of the largest public companies in the world.
The pension fund is the customer here. The market is already deciding. You're free to invest your own money as you see fit. The pension fund's money is not yours to decide what to do with.
The Financial Times' Unhedged Podcast covered the SpaceX IPO recently and highlighted the same issues that the Danish pension fund raised concerns about.
https://www.ft.com/content/a401b0c0-fcc0-4bae-9f57-e8d5c0957...
I enjoyed this piece the most [0].
[0] https://www.profgmedia.com/p/spacex-stasy
I think European countries need to get serious about investing money locally. The UK is a particularly egregious example but it’s taking begging and pleading with the mansion house accord to even convince pensions to try to invest in the UK economy. Every country should make a portion of local (at least within Europe) investment a prerequisite for whatever favourable tax treatment pensions and similar products get.
So much wealth is tied up in pensions and it’s folly to let it all go to supporting the U.S. and eschew local investment altogether.
Requiring local investing by pension funds would be rather like pushing on a rope. Until more European countries get serious about a growth agenda and reducing government interference in free markets there won't be many good investment opportunities.
I partially agree, but if my private pension needed to invest into the underperforming FTSE250 by law, I’d just opt out of that system and put my savings into a US/Emerging-markets index myself.
I’m not patriotic enough to spaff my compound interest opportunity on a bunch of dying tobacco, oil, & mineral extraction companies to put any of it to work in the FTSE250.
I don’t think it needs to be the FTSE and I don’t think it even needs to be all that much in UK funds but if you look at the default allocations of many large pensions it’s single digit UK equity exposure which I think isn’t really acceptable.
A lot of those investments are self-fulfilling though.
I don't think regular people should have a say where their pensions are invested. It should automatically be in what's best long term for the country they live in.
Kids and their wellbeing and education might be a good start…
We are talking about private pensions, right?
I don't think private pensions should exist.
Does the EU has an index that is competitive with the SP500 over the long term?
Sgt101's pension fund has excluded SpaceX for similar reasons.
But, if the index funds don't then there are going to be quite a few shares dumped to make room for the SpaceX share. This could be interesting.
Apologies for the naivety, but, why is SpaceX valued so high? Starlink? Are rockets really a lucrative business? Don’t get me wrong, being able to send objects up into orbit is cool, but is it $1.8T cool?
No. Space is not lucrative or profitable. The SpaceX profit story rests entirely on Starlink. Starlink has a plausible moat servicing ships at sea and extreme remote areas. The big problem for Starlink is that they are trying to grow into a shrinking TAM, as terrestrial wireless expands with ever cheaper equipment ever farther into the countryside that Starlink is counting on for their TAM.
Elon's visions border on self parody. If I told you that humanoid robots were going to be digging tunnels for the Boring Company you'd have to stop and think if I was pulling your leg.
> No. Space is not lucrative or profitable
Yet.
To be clear, I don't support SpaceX specifically, but the amount of resources available to us from beyond our planet are quite literally infinite, only bounded by our ability to move fast enough to get it.
Comets that routinely pass by our planet have rare-earth metals in quantities that we don't even have on the planet at all. Hell, that's where our rare earth metals came from in the first place. Getting access to 100 million tonnes of platinum could totally change how we use the metal, right now it's most effective use is probably within catalytic converters to reduce emissions from cars.
Helium-3 and Deuterium in high quantities can be used as clean fusion fuel, basically clean atomic energy.
I struggle to see how these can't be lucrative in the long term.
I can't improve on how unlikely it is that any of that happens. Space is for exploration and the advancement of science, and to a certain extent engineering, if you don't mind the inefficiency of obtaining those advancements in engineering.
How many decades ago were people hyping space manufacturing? Where are the space factories? Where are the profits?
How does 100M tons of platinum safely deorbit? Is the idea to let it crash into the sea?
bit by bit, and one of the major useful properties of platinum itself is that it's so heat resistant and inert.
It's also useful to have some heavy metals off world for further expansion.
Because of the Musk reality distortion field. The claim is that all data centers will move into space, and that SpaceX will completely own that market.
The datacenter thing is mostly just a meme that billionaires say because it makes them feel smart and gets them media attention, it doesn't seem to move stock significantly.
The actual distortion field is around Starlink. Which is the main product and the only one that's (nominally) profitable. It's the one all the hype centers around. xAI is barely even notable in the AI space.
This also makes it possible to judge the size of the distortion field, as Starlink is just an ISP, for which we have accurate valuations. And for what it concerns shareholders, a strictly worse one than a conventional ISP. Space infra is much more expenive than putting some glass in the ground, once.
Comcast is a behemoth of a company doing far more than just ISP. Worth a "mere" $90 billion. Charter Communications is a similarly sized "pure" telecom. Worth $20 billion.
Both of the above ISP companies have roughly 30 million subscribers. Starlink has 10 million. Yet they want $2 trillion at IPO.
A 20x to 100x overvaluation. And what do you get beyond an ISP?
* A private aerospace company that's not doing notably better than the space divisions of old aerospace. (Remember: Starlink is already accounted for so doesn't count here)
* An AI company that has so little demand it's currently handing a bunch of compute to Anthropic for such a deep discount the latter has claimed to become profitable.
* Twitter. Which is worth either $33b if you count Elon's internal buyout valuation, or $10b if you count realistic valuations.
While there is some hype around "The future of space!", the reality is that the long term growth for that is fairly dead in the current geopolitical climate. Nobody's saying it out loud yet but US Aerospace is being replaced. Fewer and fewer US launches will be bought. The EU is even building their own Starlink equivalent.
Starship is going to make whole entire industries viable that were not viable previously. It might even take a significant chunk of air freight which is going to be a big deal with rising oil prices.
Is that supposed to be a joke? There is no plausible scenario where SpaceX gets any significant fraction of the air freight market. Even under the most optimistic scenario the costs for suborbital launch are much higher than regular airplanes.
In a few decades there might be a small market for carrying passengers long distances really fast. Initially for the military to insert special ops troops in a crisis, and eventually maybe for wealthy consumers after safety improves.
> Starship is going to make whole entire industries viable that were not viable previously.
Starship is a complete and utter failure, as you can read about here, among other places: https://www.planetearthandbeyond.co/p/starship-is-going-nowh...
> It might even take a significant chunk of air freight which is going to be a big deal with rising oil prices.
By being several magnitudes more expensive than an airplane would ever be?
> The datacenter thing is mostly just a meme that billionaires say because it makes them feel smart and gets them media attention, it doesn't seem to move stock significantly.
A significant portion of their valuation is based on this. The spacex private stock price moved significantly based on this data center narrative.
> And for what it concerns shareholders, a strictly worse one than a conventional ISP.
This is ignorance. There is absolutely zero meaningful competition to Starlink in the maritime, aviation, and remote internet markets. 150mbps down with <80ms latency isn’t impressive in a city but it’s mind blowing on an airplane 1000 miles from land.
> The EU is even building their own Starlink equivalent.
No they aren’t. The only somewhat credible competitor so far is Amazon Kuiper(Leo) and they are still nascent.
You also forgot starshield.
> There is absolutely zero meaningful competition to Starlink in the maritime, aviation, and remote internet markets.
There are roughly 100,000 ships at sea. There are roughly 15,000 planes in the sky.
The remote internet markets are remote because either A) exceedingly few people live there, or B) exceedingly poor people live there. (And usually, both at the same time)
This just isn't a big market. That's why the telecom giants haven't bothered. To justify a trillion dollar valuation you're gonna need a billion users. SpaceX would be better off putting fiber into the ground in Africa.
>> The EU is even building their own Starlink equivalent.
> No they aren’t.
That’s exactly what IRIS [0] is though…
[0] https://defence-industry-space.ec.europa.eu/eu-space/iris2-s...
I find it amusing to read comments like these, because they remind me of the massive awareness gap between people who understand SpaceX's product line, and those who don't.
In your world, you only see and interpret SpaceX's existing products. You then see SpaceX's eye-watering valuation, and then are confused where this comes from.
Meanwhile, people who understand SpaceX's product line, and the implications these products in five or ten years, can analyze the situation more accurately.
I can tell you are in the unaware group, since you don't mention nor analyze two of SpaceX's world-changing products (Starship and Starlink Mobile).
Rocket launch ex-Starlink is a small $N-billion market; a few dozen flights at $50M per flight. Starship is revolutionary and I can easily believe that it will expand the market by a remarkable order of magnitude. Multiple tens of billions. How does that justify a valuation over $1T?
Starlink Mobile is more significant, but it's still unlikely to double Starlink revenue -- most mobile traffic will always be transited by local cell phone towers.
P.S. I think somebody is going to make a lot of money from Starship. The money in space is not from launch but from the services it enables. Starlink >> Falcon9. But I don't think SpaceX is going to be the ones to find the next Starlink. It's much more likely to be a third party who launches on multiple providers to keep costs down.
I'd love to know what your analysis. This is a genuine request. No snark. I'm genuinely curious of other view points.
Isn't Spaceship an requirement to make starlink profitable?
Srsly?
Just to be very clear about Starship: We have a very limited amount of payload we are sending up in space every year.
The biggest jump in payload is starlink itself. Starlink though doesn't scale very well. V2 can only handle a certain amount of customers and has only a lifetime of 5 years.
Space-X has to build Starship to even being able to send v3 up to increase the margin of this setup. But even then, every 5 years that thing has to be replaced and new build.
Every mobile tower, fiber cable etc. underground has a lot higher lifetime than that.
Starlink also has the issue of latency handover. Every few minutes you have to do a handover which leads to package loss. I can't do a Teams Call through Starlink fyi.
And Starlink already exists and is relativly affordable despite that, they only have 9-10 Million customers and they had to increase the price.
And while all of this 'magic no one gets' is happening, Starship hasn't profen non leo orbit with proper payload AND reusability. Without reusability, they will not get the costs down that much anymore. Its already relativly cheap.
And in parallel all of this 'trillion dollar future margin magic' gets opposition by other companies like eutelsat and Amazon.
Ah yes the world changing product of starlink mobile. Which doesn't get booked in the USA, is slow and needs a lot of energy. Whatever you think this is, 500km mobile range is 500km and this on a planet were normal people already have a very very well working mobile setup for at least 10 years by now.
Is space-x some kind of business gap? yes sure. Will they make billions with this? Depending on other companes, yeah sure. Is it a trillion dollar business? No
Yes yes i'm fully unaware of this.
Btw. Musk def sells you the story of Mars and dyson sphere and stuff to keep the magic but while he does all of this, he rents out colossus 1 and 2 to his competitors because he is unable to sell his OWN AI product.
"You just don't understand bro" has been the trite handwaving of criticism for a over decade now. It already wore out when the bitcoin bros kept saying it to all their critics.
> I can tell you are in the unaware group, since you don't mention nor analyze two of SpaceX's world-changing products (Starship and Starlink Mobile).
Just because I did not mention Starship by name does not mean it's not in the reply.
And Starlink Mobile is still an ISP. "It's worth a trillion dollars because it's mobile!" Haven't heard that one since the Dotcom bubble.
But more to the point:
> Meanwhile, people who understand SpaceX's product line, and the implications these products in five or ten years, can analyze the situation more accurately.
They are looking 10 years forwards. I am looking 10 years back.
This exact same "just you wait, in 5 years there'll be a miracle technology that generates infinite profit" rhetoric has been used for those 10 years.
Still waiting on the miracle self-driving that was supposed to justify Tesla's $1.6 trillion.
'If you don't agree with me it's because you don't understand' is such a tired, boring trope.
Do you have anything to add to that sentiment? Maybe a pro-forma, rather than feelings?
Enlighten us then, please. What are we missing?
This sounds amazing until something needs replacement. Until data centers on earth has a 99.99% (or higher) level of autonomous operation with very minimal requirements to maintenance and part replacements, they're not sending anything into orbit...
It sounds amazing for 14yo boys who are not specifically into hard sci-fi.
I guess we'll see, because most 14 year olds don't have a lot of money to put into SpaceX.
'Stock goes up so we buy it' has sufficient explanatory power to resolve this conundrum.
I also sounds amazing until you remember how hard it is to cool something when your only option is radiative cooling.
You could also transfer the heat to tungsten rods and drop them on rivaling earth-bound data centers.
Why tungsten? In terms of thermal conductivity, It’s way worse than silver and copper and on par with good aluminium alloys. Those are cheaper and much lighter (so again much cheaper to put into orbit).
https://en.wikipedia.org/wiki/Kinetic_bombardment
The idea is to use tungsten because of the high melting point and hardness so that it survives re-entry in order to best strike the rival datacentre.
Starlink already operates this way. You don’t replace parts, you launch new sats.
Where did they say that all data centers will move into space? I thought the claim was that it's going to be more and more feasible and profitable to have DC's in space.
Elon Musk is saying this together with Dyson Sphere and Mars colonisation.
In his FCC filling he also mentions DCs:
https://docs.fcc.gov/public/attachments/DA-26-113A1.pdf
And yes its absolutly wild.
His Scifi ideas are probably a min of 100 years too early.
And while he doesn't even need his own compute (renting out colossus 1 and 2), he thinks we will send server racks full of expensive hardware into space in no time.
Why?
Because his Space-X Trillion evaluation doesn't make sense if he doens't has payload for Starship.
So how much payload do we send to space? Actually not that much, starlink itself is the biggest change by far. So he builds Starship which he needs for starlink v3 but what then? Yeah Datacenter in space...
I truly do not understand why anyone believes anything Musk says anymore.
could it be that those people don't actually believe him and just appreciate the genuine shit-show he puts up enabling them to laugh at people who get sad about what he says, and their eagerness to believe
One must also consider the proximity between musk and the trump administration, the market pricing this proximity is the market pricing power, access and aligning its interest with the blatant collusion between political power and business in the US.
That or the good ol’ « dump it on retail » scheme
According to SpaceX's own documentation more than 80% of their value comes from xAI and their data centers. Starlink is where they are making the money, but they are pouring it into AI.
Starship makes space access 1000x cheaper than before, with cost-to-orbit under $10 / kilogram. Also much larger payloads become possible. That's an insane economic unlock, because space contains unlimited amounts of resources and energy. Space-based manufacturing, building space hotels, mining asteroids etc. becomes viable. Larger satellites and probes for commercial or scientific use becomes possible.
All this might not make sense in a standard business sense. Real profits might be decades away, who knows. Anyway, people are willing to throw their money at it, because they think it's important.
If they succeed in the long term, it'll easily be the most valuable company on Earth.
Valuable, sure. Most valuable on Earth? Ridiculous.
We know that xAI (with X) is struggling.
SpaceX is growing quite slowly. You could argue that Starship is likely to somewhat accelerate growth.
Starlink is doing well but also growing somewhat slow.
A more rational valuation would be 900b-1000b.
The rest is Musk and FOMO.
Starship is currently a money pit.
People betting that the price will go up because they think other people are doing the same thing.
Monetary policy in the US is too loose and has been for years
As long as you can offload your bag to the next sucker the value will be high.
Most shareholders don't really care about the company they have shares in.
Big picture: Nice-sounding economic theories claim that stock market valuations are rational, but those theories are mostly bullshit. As soon as the actual humans in the real-world stock market get excited, or scared, or otherwise emotional, they mostly stop caring about all that stupid boring gotta-do-math "rational" stuff.
Yes, eventually, the humans have to sober up, and stock market valuations return to approximately what the economic theories say they should be. But the dangers of betting on that "eventually" are very well known: https://quoteinvestigator.com/2011/08/09/remain-solvent/
The earth is finite, and space, for all intents and purposes, is not, and expansion into it would thus be required to sustain any super linear growth of the economy. Well, and rockets are cool. Perhaps people would much rather invest in something with the veneer of furthering space exploration (and the promise of infinite riches) than buy into some crypto blockchain startup. And, its not as if other current valuations are sane.
SpaceX isn't opening space to everyone. They're are preparing for the select few to be able to escape once the earth is no longer sustainable due to their own efforts.
Actually given that the first colonists on Mars will live pretty miserable lives before dying early of radiation poisoning Musk and Co are trying to recruit other people to move there.
Musk, Thiel, Bezos etc. none of these guys have ever said they want to move there.
I am thinking of moving over my investments from S&P 500 to S&P 500 ESG, as they have excluded SpaceX and Tesla.
$XVV (iShares ESG Select Screened S&P 500 ETF) holds $TSLA
SRI and ESG advanced funds exclude Tesla.
Damn you're right.
With schemes like SpaceX, and the general number of large-cap-but-negative-earnings companies trading on the market, I feel like the conventional wisdom of DCA and chill / just passively buy the index will turn into an underperforming strategy vs a slightly more active or opinionated approach.
In my understanding some index funds i.e. FTSE Russel ones will include spacex with the weight based on the floated stocks, so in practice the weight in the index will be small enough in All Cap etc indices. So I decided for myself it is not a cause for concern. But I think now it is the time to look for index providers who do not decide to bend the rules for short term gain (i.e. S&P and Nasdaq).
SpaceX is responded to the float issues by having a continuous increase in the unlocked stock available on the market. And NASDAQ was the first index to promise a quick inclusion of spacex.
But isn’t “passively buying the index” still exposed to this, at least if you’re not buying “equal weight” version? Dividend stocks sounds even more appealing to me, I read that as “companies that are generating stable profits now”.
Just buy ETFs of index funds that only include dividend paying stocks
Another factor. TINA. There is no alternative.
I wish they didn’t manage to change the nasdaq rules, forcing a lot of index ETFs to buy spacex at IPO, whatever the price.
Edit: glad to see vanguard VT tracks FTSE which isn’t impacted. The amount of overvalued spacex stock in VT will be minimal down the line as they use the amount of publicly available shares to calculate the weight in the index, which is the more sensible way to do it, Musk’s scam not withstanding.
Earlier: https://news.ycombinator.com/item?id=48324097
(Apologies for the bad grammar, my son was born a little over 24 hours ago. I’m choosing not to use a LLM, so you are getting the real me)
Even sovereign funds (example Norway) are invested in American tech, funds, and indexes.
It is interesting to think about (from the perspective of an immigrant to Norway) how I moved my life’s savings from the US to Norway.
I’m now fully invested into Norway (real estate, savings, and retirement).
My understand is that Norwegians (and the nordics) have historically looked up to the US as a world leader.
I think that is no longer true and maybe this decision by Denmark is a data point of how the Nordics are changing?
It kind of feels like we all have been caught holding the bag (US reserve currency) and now we have to carefully unwind our position.
I’ve lost my point. Maybe my goal here is to just contribute to this discussion to distract from the exhaustion.
As a Nordic (Finland), I think this is true. In the history, US has been always admired and we've loved to travel there and cherish the culture. Damn, I was there when Conan O'Brien traveled to Helsinki, and greeting him with this massive crowd of people who really love him. I married an American, I've traveled through the country multiple times with my partner. Love the food, people, the nature, the cities.
But this has definitely changed for me now. The idea of crossing the border and having to flip a coin is the border control guy a nice guy or not is not appealing as a diabetic who needs his phone to be with him untampered and who doesn't want to sit in a cell somewhere for days/weeks because they posted a funny meme of a person you can't joke about. Or who just witnesses this absolute inequality happening, and who witnesses the leaders of this country coming to my country and giving their support for parties who want me to not marry and who doesn't want to see me existing.
I am just tired. And sad. I wish I could get our relationship back with the US but I don't know... Even if we backtrack from here, get back to the "olden times", it will take a moment until I can enjoy US again.
P.S. Conan is still a treasure!
Conan is great!
> The idea of crossing the border and having to flip a coin is the border control guy a nice guy or not
That is nothing new. It's how it's been forever. And not only arriving in the USA, but also Canada, Germany and other places.
Well... Strip searching and jailing young German girls in the border is not something I hear happening very often in countries like Canada, Germany, Denmark, Finland... Actually I have not heard that happening even once! My American partner has crossed the German border countless of times from US. Before they got an EU passport, even then the border queue was prompt and the guard sometimes asked a joke in German and a minute later let them pass.
I waited hours in Newark even before the current joke of a government. The risk of being in a jail without my phone which has a life-saving app to manage my diabetes is a risk I am not going to take.
> Actually I have not heard that happening even once!
Have you heard that happening more than once?
Having your luggage searched, long interrogations, dog sniffing, and then more interrogations - that has been common on international borders. All for no other reason than the border guard didn't like your face. That's my real life experience as a person who used to travel a lot. And many others I've met told similar stories, including being denied entry. So it's been a coin flip for a long time.
> jailing young German girls in the border
Last time I read that story they were given the option to immediately fly back to Germany for free after their tourist visa was declined but the girls declined the flight because they wanted to fly somewhere else on another flight which wasn’t available yet, which means they had to be detained. So they stayed overnight in an immigration detention facility which included a search.
They also flew to Hawaii without a hotel booked which is something the guards always look for (that was basically 101 common knowledge when I first crossed 15yrs ago). Just like how having a flight out prebooked is important.
Realistically, as World War 2 demonstrated, Finland’s independence rests on America’s will to protect it. And after it, Norway and Sweden as well.
Strategically modifying one’s pension fund choices to prevent having sub-prime companies bundled into a possible success is not a sign of anything. The Nordic nations will attempt to stay allied to the US because survival depends on it. They are much closer to the frontier and Western Europe’s ability and desire to protect them is substantially weaker.
In the event of a fall of NATO far western countries like Spain or Portugal will likely free-ride by virtue of their geography. The Finns get no such benefit.
Get off your phone and enjoy the time lol - journal instead if you must write something
Gatekeeping is never a good look.
>I think that is no longer true and maybe this decision by Denmark is a data point of how the Nordics are changing?
No, this is just standard pension fund governance.
Right, that makes sense. I assume it happens often as part of the governance process. my original statement could have be better phrased as a question.
What are your thoughts on the general consensus of Nordics views and opinions about the US?
Congratulations :)
As a Dane, I would say yes. Especially among boomers there was always a genuine appreciation of the US and its role as guardian of a rules-based international order and western civilization more generally.
I think that sentiment has gone, even as younger generations have increasingly incorporated English words, music, TV and more into their own, but you seldom hear the same genuine trust in the US as a force for good.
I'd say in Norway there's more inherent trust in America. People may appear a bit more critical, but by now it's part of the culture. Even though you have some regresion of that trust due to Trump and polarization, I'd say most people see the US as a core part of Western society, cultural and critical to defense.
Congratulations on your newborn son! You must be on cloud nine (no pun intended).
Congratulations, and enjoy your time :)
Presumably Musk will sue them.
Or tell Trump to start a war with them.
I'm pretty sure Trump threatening to invade Greenland/Denmark played a part in the decision to not invest in the company.
Good move.
Elon is rigging the stock market and getting index funds to invest in companies that are over-valued and thus not stable.
https://m.youtube.com/watch?v=sYA-z0Y8WRQ
The issue is raised a lot but there is less and less time and I don't think it will hit mainstream before IPO is done and pension funds/passive investors will be forced to buy it.
It really does look bad: low float multiplier rule (that will overweight SpaceX) introduced very recently, fast inclusion mechanism, insiders being allowed to sell faster than usual etc.
It all looks like an orchestrated dump into passive investors/pension funds/other ETF holders.
Investing in IPOs is a terrible strategy historically. Here we have several mega IPOs incoming with rules being re-designed just for them to be included faster in your "passive" portfolio.
I've recently been thinking about pulling my money from all of the US funds that I currently have. I really don't want my investments to be in SpaceX, OpenAI or Anthropic.
With the new Nasdaq 100 fast track rule, I'd certainly get out of any index that tracks it, or any funds that are invested in it. I don't know if any other indexes have had similar policy changes...but, if it works this time, and insiders are able to steal a few billion dollars from retirement funds without people even realizing it, I'm sure it'll become more commonplace until we have a functional government that regulates this kind of crime.
https://www.kiplinger.com/investing/what-the-nasdaqs-new-fas...
Apparently my US index fund is based on MSCI, which is even worse: eligible after 10 trading days. Although the float-adjusted market cap calculation should lessen the blow.
I’m going to be selling out of my Nasdaq ETF too. Such a shame.
Buuut if Anthropic does the same and lists on the Nasdaq then I might reconsider.
Just buy Anthropic directly, why dilute your money through an ETF?
> been thinking about pulling my money from all of the US funds that I currently have
What’s holding you back? And what alternative investments are you considering?
I recently did homework to decide whether to double down on VOO (S&P 500 index) or to diversify via VXUS (ex-US index), and concluded VOO is better for my risk-adjusted ROI outlook and time horizon.
Same. Though I’m 85%+ VOOG
Momentum, really. I usually just buy more of a given fund and don't really take any out. My small portfolio is split across different funds, so I'd probably just split around the money I'd withdraw from the US-based ones into the other ones.
> I really don't want my investments to be in SpaceX, OpenAI or Anthropic.
This just being an incomplete list or is there another reason you name the last two but not Google?
Google being one of the most profitable companies on the planet might contribute? OpenAI and Anthropic don't seem to be profitable while SpaceX is weighed down by heavy losses on grok.
Why not Anthropic? They’re a very rare company capable of charging $200 per month per seat level fee across the corporate workforce.
Yes their compute costs are astronomical, but that can be managed down over time by more efficiency or mild enshittification that doesn’t create too much churn.
> Why not Anthropic? They’re a very rare company capable of charging $200 per month per seat level fee across the corporate workforce.
Because no part of this statement is accurate. They’d like investors to believe it’s very rare but they have multiple strong competitors, most of whom have much better financials, and the entire sector is worried that the open models are going to effectively cap rates below what they need to pay off their massive investments. Lastly, they’re not universally must-have in software development which is one of the domains best suited for LLMs but most corporate work lacks similar correctness oracles and we’re already seeing major corporate customers reconsider the cost/benefit ratio.
None of that means they’re doomed but a lot of stars need to align for them to keep their valuation up. They don’t need to go out of business for investors to lose money buying in at the peak.
You would think you’re investing in a software technology company, but after reading a bit of news stories, you realize you’re quite literally funding war crimes. If I invested in an arms company, I’d have reasonable expectations about what I invest in. Investing in Anthropic at surface level looks like investing in software for hobbies and business.
It’s pretty depressing to be honest. I don’t know how I could work in any of these military industry companies.
Normally Danish pension companies and banks will refuse to invest your money in weapons manufactures (unless you have a lot of money, then they apparently don't care). But as long as your money is invested as a pool, they won't do weapons.
I think you're right that e.g. Anthropic wouldn't be on the block list, because: It's an IT company, and I suspect that even Palantir might make the cut. It is fairly annoying, because my pension fund won't invest in Rheinmetall, SAAB or Kongberg, which I think they should, but they will probably invest in Anthropic, OpenAI, and SpaceX, which I don't really like.
It’s probably quite similar here in Finland. I’m interested to see what the current fund(s) contain.
All major indices have always included defense contractors.
Also, when you buy into an index fund, you are not funding the companies that the index tracks. That’s a misunderstanding of how the markets and index funds work.
you seem to be implying that, secondary markets have no effect on primary market prices, and i just want to make sure that's what you meant.
>I don’t know how I could work in any of these military industry companies.
You'd sing a different song quite quickly once the threat stops being abstract as you don't get to free-ride on the security a defense industry provides.
The defence industry that would be required to prevent an invasion of the US mainland is at least an order of magnitude smaller than what currently exists to sustain the US empire.
I wouldn’t, but thanks for the reply. I’ve gone through conscription and we are neighbours with Russia. I’ve not lived a day in my life without existential military threat.
You don’t think there are causes worth fighting for? Or that deterrence is immoral? Help me understand.
Replace "war crimes" with "hardware" and it's an equally good reason not to invest.
They're valued like software companies, but they have terrible margins compared to software. Investors haven't figured out how to value these companies.
> you’re quite literally funding war crimes
What difference with Microsoft, amazon and google? They all heavily support the military.
(S)he said: "pulling my money from all of the US funds that I currently have".
Edit: OK, no the same person.
There is none. That’s why I wouldn’t invest in them either.
Chinese hardware and energy headwinds aren't going to be great for Anthropic, apparently not even over a 1 year time horizon.
Because I don't really trust any of them, and I don't believe that the business is self-sustainable. At the moment we're in a phase where CTOs are able to withdraw money from the corporate bank accounts to be "on the cutting edge", but I don't think that's going to last. I'd rather have my money in something else.
Index funds adjust based on performance of the underlying stocks, so it doesn’t really matter if one of them does poorly. The index fund will adjust. When you buy an index fund like the S&P 500, you’re taking a position that the mega-caps it comprises as a whole will give you outsized returns over extended periods of time.
And they "only" need about 100 million recurring subscribers at $200 per month to make the profits that will justify their nearly $1 trillion valuation with almost no room for growth whatsoever, so who wouldn't want a chunk of that pie. (numbers calculated on back of imaginary envelope)
For those commenting that this decision may have a political element: Greenland is a part of the Kingdom of Denmark.
Musk is a prominent Trump/MAGA supporter, and Trump has threatened to annex Greenland by force. SpaceX is part of Trump's Golden Dome project, and one of the reasons that Trump wants Greenland is to site ICBM detection and interceptor systems.
All good points, but I think their main point of poor governance is still the pure motivation.
The governance issues seem much worse than the other issues with pricing and inclusion.
> ... part of the reasons that Trump wants Greenland is to site ICBM detection and interceptor systems.
Nothing is stopping the US from deploying those in Greenland right now.
The only reason Trump wants Greenland is he's not all there -- Greenland looks big on the map so he's fixated on it.
> Nothing is stopping the US from deploying those in Greenland
That would require the (politically unlikely) agreement of the Danish government. See article 2 of the relevant treaty [1]:
"...establishing and/or operating such defense areas as the two Governments, on the basis of NATO defense plans, may from time to time agree to be necessary..."
> The only reason Trump wants Greenland is he's not all there -- Greenland looks big on the map so he's fixated on it.
I agree that that is part of it, but there is more to it than that.
[1] https://avalon.law.yale.edu/20th_century/den001.asp
Why wouldn't Denmark agree? Danish and Greenlandic politicians have reminded the US several times that more bases can be established under the terms of this treaty.
E.g. https://www.bbc.com/news/articles/cx21669452lo
So, you're saying the US (300+ mln, #1 military) never actually requested to deploy them and Denmark (5 mln) never actually refused. But because you think an agreement is unlikely, it's straight to annexation by force. Do I have that right?
No, I'm saying that new military installations would be unlikely to be agreed due to domestic political sentiment. Pituffik was certainly agreed by both sides, but that was a long time ago.
(I'm not Danish or Greenlandic, so this is just my reading of the situation.)
You are reading wrong, and should maybe stop chiming in on stuff you have no idea about. An active agreement about US basing on Greenland exist, and has existed for a long time.
Then why not hedge? If they take Greenland at least they have their pensions.
[dupe] Discussion: https://news.ycombinator.com/item?id=48324097
American gov is gonna invade Greenland for sure for not cooperating with american conmen
I mean it isn't like it was automatically included.
We need Calpers (California pension fund) and others to do this as well.
I am waiting to see if the same outrage will be in place when Anthropic and OpenAI go public. This surely isn't just a dislike of a certain individual, is it?
hope my Danish pension fund PFA doesn't do the same
Oh this duplicate post again. SpaceX stock may as well be bonds on space flight. I'd buy them at a loss.
That sounds dumb.
But it good illustration of why valuation is so high
Because people make dumb choices? That I would agree.
I would refrain from calling it “dumb”. Just different. Maybe a bit of a hype thing.
I don’t think this is politically motivated but posting this on HN (and the 2nd time reaching the front page) sure is
Musk chose to make the political aspects unavoidable but I don’t think anything related to major investors’ reactions to one of the most hotly awaited IPOs here is primarily a political move. I’ve been on HN for a while and people here have always had a soft spot for SpaceX — there are probably grown adults now who were born after their parents were speculating about the company here! — and the valuations of SpaceX and Tesla have been the topic of discussion for many years, too. Toss in AI and X and it’d be more surprising if it wasn’t getting a lot of chatter.
Political tribalism wearing a mask of financial news. There are many pension funds and many large companies with valuation problems. Plenty of them in the tech sector. Everyone involved in propagating this story understands the political move they’re making.
Personally if anyone cares my take is that our economic problems are basically structural and geometric at this point. DC is a circus of people tasked with solving them and with the general competence the process selects for, the problems are in a practical sense unsolvable. So instead we get the tribal war spectacle over who holds the pen. Meanwhile the problems sit on the desk with a blank in the answer space.
The criticism seems politically motivated. Considering what happened to Blue Origin, SpaceX's success is commendable. Although I agree $1.8T seems crazy.
I don't think it's politically motivated at all. My impression of this IPO is that it's designed to inflate SpaceX's perceived value by offering very limited float and aggressively seeking to capture passive money by bargaining for inclusion in indices it would not otherwise be eligible for. Speaking as a passive investor myself, I want my money nowhere near this company until it meets the old eligibility criteria.
Elon achived this valuation by merging xAI into SpaceX. The future of xAI is questionable, and without it SpaceX is very overvalued.
SpaceX has the potential to be the most valuable company ever if the space economy expands. Starlink will be a tiny puzzle piece by then.
How is this even debatable.
Why do people believe SpaceX is trying to democratize space flight? Thats demonstrably false if you actually listen to the things Elon says. He wants to go to Mars so he can setup the equivalent of the racist gated community he grew up in. That way he and his rich friends can escape there once being on earth is no longer tenable.
If the space economy expands + if spacex continue to hold market share + if it can do so while increasing profitably against increasing competition in the future. And considering the argument is for "the most valuable company", if spacex can do all of the above while other non-space related companies that are hugely profitable slow down their paces of innovation, spacex could be the most valuable company ever.
The SpaceX S-1 contradicts your claim by including an optimistic "TAA" (total addressable market) figure for "the space industry". Which falls heavily short of your claim. While the SpaceX claimed total TTA is mostly (like 80%) AI-powered "enterprise applications" which don't exist and are not related to space data centers or whatever.
How is this even debatable.
What space economy? Aside from satellites- which have been a known quantity for a long time- I'm not seeing it.
Also, starlink is stupid as a long-term play. Do you really think tossing satellites up into to space and replacing them every few years is cheaper or more sustainable than just building out wired infrastructure on the ground that can be used for decades? Plus, the is a finite limit to how much they can scale based in physics.
The "space economy" is not yet a certainty, other than in the mind of science fiction fans. (Unsurprisingly, hard to reach irradiated rocks of undifferentiated boring minerals in a cold vacuum are of negligible value to humans here on Earth.)
Even if the Star Trek utopian future materialises, it is very likely to be a long time from now.
1. SpaceX has competitors. Most are making reusable rockets.
2. SpaceX has no moat.
3. The concept of money itself might change dramatical by the time SpaceX becomes a multi-planetary mega corporation. Investing now may not return returns in any meaningful sense.
>The "space economy" is not yet a certainty
True, and that's exactly the reason why people want to buy this stock now.
If future returns were already (almost) certain, they would have been priced in and you couldn't make any money with this stock.
This is a classic high risk / high reward stock. IF the space economy takes off you might 10X your investment. If it doesn't, you might lose most of it.
Rich people (who own most of the stock market) can afford to make such high risk bets, because they can afford to lose the money and thus many will make that bet.
This is the only sane reply so far, and being on HN (notably a VCs platform) this is rather sad.
While the Starship project may be struggling, Falcon 9 is still a massive success, with a successful launch every couple of weeks, making up most of humanity's access to space/LEO right now.
And Starlink is a pretty big deal, particularly in a time of conflict where undersea cables are very vulnerable.
If Elon hadn't shifted so far to the right, these threads would be near-universally praising SpaceX despite Starship's struggles.
Falcon 9 is a serendipitous technical success for a rocket that wasn't designed to land and be reused. It is an operational success. Whether that makes it a financial success is very questionable.
Starship is meant to answer all those questions about design intent and financial viability and then some. It could readily turn out to be an example of second system syndrome.
> If Elon hadn't shifted so far to the right
A symptom of his fickle nature and erratic behavior, as well as general poor impulse control, all of which rightfully make people skittish with their money and question his judgment.
I dont think he was fickle with this one. He was remarkably consistent.
He had period where he though he can become hero for the democrats due to green cars. It did not worked, neither democrats nor left accepted him as unconditional hero.
The racism, the villingness to cause harm to get more power for himself were there whole time. He was far right the whole time, just became more extreme and open when it stopped being disadvantage.
He also loudly proclaimed support for trans rights and called out people on Twitter who didn’t, as well as other progressive issues. It wasn’t just “green cars.” So either he was just being a cynic/lying, which is bad. Or he suddenly became a bigot, which is also bad.
But it’s at the whim of someone who I think nobody can describe as stable or trustworthy. Starlink the technology is great, Starlink the company has a massive weight attached to it.
Interesting definition of "struggling", as in "managed to catch the largest booster rocket ever built with by snatching it mid air, and land the largest space ship in the ocean using a belly flop maneuver that everyone said was crazy and would never work".
The 'struggle' is that they seem to have regressed from that point, and that the scale of Starship is perhaps too big for a 'fail fast, iterate rapidly' approach.
Especially now that every failure results in a massive wave of negative publicity
Not even remotely politically motivated.
It doesn't matter if it's successful or not. Their space business is worth virtually nothing on paper and the funding structures and profit/loss accounts are scary.
Most of the 1.8T hype is not at all related to the rocketry business. Well, I suppose if you buy the "AI DCs in space" pitch they could be somewhat related.
If you buy the "AI DCs in space" pitch, you deserve to be parted from your money.
I am baffled by how many people are buying in
What's political is a policy change to "fast track" companies into the Nasdaq 100. Spacex is the first to benefit from this loophole that allows them to be added to indexes almost immediately after listing, which likely is a license to steal a bunch of regular folks retirement money. Elon Musk doesn't need more ways to steal people's money.
The unfortunate thing is, a lot of people have no idea this rule change has gone into effect, and that they're about to get fleeced by a bunch of professional investors.
https://www.kiplinger.com/investing/what-the-nasdaqs-new-fas...
It's legalized theft, and the victims are people least able to defend themselves from it. Most people have no idea what's in their retirement accounts, or track very closely what's being tracked by the index funds they've been told for decades was the safest way to invest in the stock market for non-pros.
>Akademikerpension also said the governance structure of SpaceX was "extremely deficient", adding that Elon Musk is expected to control more than 80% of the voting rights while simultaneously serving as chief executive officer, chief technology officer and chair of the board.
Their skepticism seems pretty valid to me
The company is wildly overvalued. It'd be funny if Musk wasn't about to walk away with a bunch of money stolen from retirement accounts.
I think you'll find the whole valuation of the S&P500 is built upon retirement accounts. Yours. Mine.
In other words, look one level deeper and you'll see it's not the S&P500 that's overvalued. It's you and me and 100 million other people desperately attempting to make sure young people pay for them for 20-30 years when they're old.
And then you calculate it out ... and see it's not happening. No matter what the number on the account says.
There's the normal level of... optimism. And, then there's SpaceX, a scam on a scale the world has never seen.
Zuck was in roughly the same position and they didn’t put out a statement skipping that IPO. The valuation criticism is more valid but this line belies political motivation.
More than 10times higher (possible valuation), 10+ years of Musk showing what kind of liability he is and at that time Zuck didn't have all the main CxO positions.
I don't think it is similar therefore.
Google too, and this was in the long term best interests of shareholders.
Imagine in 2010 if investors had real transparency into how much money YouTube or Maps was losing, along with the governance structures to enforce their concerns.
Musk appears far less predictibile, more volatile than Zuck. Musk also got directly involved in US politics aligned with of a man who singlehandedly butchered US relations with almost everyone in the world. A man who threatened Denmark with taking their territory by force.
You’re calling it “political motivation” as some sort of blind hate or vendetta out of principle, cutting off the nose to spite the face. But you can no longer separate Musk from politics and aggression towards Denmark.
The pension fund’s assessment looks entirely valid, objective and justifiable to me. But for anyone who personally favors Musk and his political views any dismissal will look politically motivated. It’s easy to cry foul. In this light your shallow dismissal might be just as politically motivated.
The political motivation is on Musks part. There's no unpolitical view of a man who ransacked the US government and is propping up far-right movements all over Europe.
Has anybody noticed a marked increase in simping here on HN?
They've been simmping for Musk for at least a decade. Doing it for AI is only few years old.
There's a lot of it. But I also see a lot more skepticism of Musk and the rest of the intellectual dork web. Flirting with fascism was edgy. Now it's just icky.
Think so? I feel like HN has always had a high level of simping.
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.
"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.
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.
"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.
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.
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.
That strategy would be a taxable event.
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.