Comment by epistasis
1 day ago
I'm usually a Boglehead, with some exceptions, and one exception I'd love is some sort of trade that would eliminate my exposure to SpaceX for the next few years. I'm sure there's some combo of options that would do it.
Probably finding an ESG-focused ETF would do it. ESG basically meant "good governance, we follow laws" which translated into better governed public companies that therefore had better returns, as one would expect. Really weird how it was politicized into something entirely different...
There's an ETF for everything out there. (There are more ETF's than stocks). There'll be a large market for "S&P500 without SpaceX" et al, so it's seems likely somebody will fill it. It probably will have to use a worse name because of the S&P trademark.
P.S. Here's an example of S&P500 without the magnificent 7 https://www.defianceetfs.com/xmag/
A&W 500 (because it only lists companies A-W)
> I'd love is some sort of trade that would eliminate my exposure to SpaceX
You can just short SpaceX of an amount equivalent to its share of your SP500 holdings. You will have to pay borrowing costs though, but on something that liquid it will be very small.
Yeah. For comparison, SpaceX will be maybe half the size of MSFT. MSFT is 7.4% of the SP500 index, so for a $1,000,000 portfolio if you were to short MSFT you'd pay 0.25% on the value of that 7.4%, or $185/year.
So eliminating SpaceX exposure will cost you $100 per million of your SP500 ETF per year, or so.
Shorts have unlimited risk. Buying a put is risk-defined and probably a better strategy.
No, because the unlimited risk of shorting is balanced (hedged) by the unlimited upside of holding the same number of shares via the ETF.
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It's not just a short, it's a portfolio of X short + X long. It's effectively canceling perfectly.
> some sort of trade that would eliminate my exposure to SpaceX
I think it's less complicated than you'd think.. just buy LEAPS puts proportional to your exposure.
LEAPS are very expensive.
Because they're long-term, yes. It'll really come down to how much you're willing to pay for monthly Elon-shenanigans-insurance.
I'm very interested in seeing how the market prices these options after the IPO.
I've sold all my stocks. My reasoning is that if AI stocks go bust, they will take the global stock market with them.
One annoying thing is that those "non-standard" ETF variants have much higher management costs than basic S&P500 / All World ETFs.
Dimension funds aren’t bad
Stock markets are ruled by hype and fomo. Good corporate governance has little to do with returns, unfortunately.
Short term gains are hype and fomo, but if you're holding index funds long like I am, then returns have a lot more to do with performance. And given the lack of hype around ESG, it seems like an exceptional time to buy in to it.
That's also the kind of thing that pension funds should be investing in. They shouldn't invest in hypes as they're by definition in for the long haul and eventually hypes always blow.
Sure you can make a lot of money but only if you know when to get out before the crash. And that's something that doesn't gel well with long term investment.
Bro the index is about riding the hype and fomo and when the phenomenon progressively loses track it gets less and less quota
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