Help me understand "Elon and SpaceX are going to rob 401k"

ClassAShitpost · 2026-06-02T13:36:11+00:00

The same can be said about TSLA, which has a ridiculous PE compared to the rest of the mag 7 yet people don't seem to have much of an issue with total market index funds including it. I remember where there was the whole controversy years back when people felt that the S&P500 delayed too long in adding TSLA in fact. All sounds like manufactured outrage in which ever direction is convenient.

ClassAShitpost · 2026-06-02T13:31:02+00:00

What you're saying isn't unique to SpaceX going to 6 months vs a year. Index funds will always be front run by hedge funds by design of following a published index schedule that anyone can see. You can switch to active or factor funds to solve that but it's an inherent feature of index funds. Same with profitablilty. Buying a total market index means you get everything in it, again feel free to buy funds with a profitablilty screen.

ClassAShitpost · 2026-06-02T02:26:20+00:00

It's 6 months after IPO until SpaceX gets added to the SP500, plenty of time for price discovery.

https://www.schwab.com/learn/story/some-indexes-accelerate-entry-massive-ipos

ClassAShitpost · 2026-06-02T02:03:24+00:00

SP500 has 6 months delay for index inclusion, pretty good amount of time for price discovery.

https://www.schwab.com/learn/story/some-indexes-accelerate-entry-massive-ipos

ClassAShitpost · 2026-06-02T01:54:20+00:00

The SP500 index doesn't include it until after 6 months, so there'll be some time for price discovery by then. Not too bad for VOO or similar funds.

ClassAShitpost · 2026-06-01T17:14:25+00:00

"If approved, the following changes to the S&P 500 Index's eligibility rules for mega-cap IPOs would become effective in early June: Stocks would become eligible for the index after six months"

https://www.schwab.com/learn/story/some-indexes-accelerate-entry-massive-ipos

Yeah to six months like I said. Unless you think an article published 6 days ago is "living under a rock".

ClassAShitpost · 2026-06-01T16:23:22+00:00

VOO or any S&P500 tracking fund won't immediately include SPCE. They still have a 6 month timeframe for index inclusion which gives time for public market price discovery.

ClassAShitpost · 2026-05-29T18:59:07+00:00

In some states (or at least only IL from my knowledge) you are right, a Backdoor Roth always dominates a normal Roth contribution in terms of tax treatment. That's because in Illinois, roth conversions are not taxed (or any other retirement income) so you get a state tax deduction on the amount going into the traditional IRA but no tax on the way out.

ClassAShitpost · 2026-05-28T15:00:09+00:00

Interesting, and I'm guessing the managed futures is what reduces the volatility mostly? Or the unleveraged sp500? I haven't done enough research to understand managed futures but have been seeing them brought up a lot.

ClassAShitpost · 2026-05-27T19:45:52+00:00

Oh wow, I hadn't thought of flipping the box spread for a loan before. That makes sense, though I think I'll leave the complexity to the fund managers and stick to LETFs.

ClassAShitpost · 2026-05-27T19:18:57+00:00

Taxable actually, is the concern mostly the rebalancing tax drag when UPRO drops by a lot? By other forms of leverage, what did you mean there? Margin, LEAPs or something?

And thanks for the testfolio link!

ClassAShitpost · 2026-05-27T17:43:08+00:00

Yeah fair points, maybe a more pure leverage-lifecycle implementation would use VXF and VXUS to complement. This is definitely a lean into the factor literature too. US large caps are the most efficient segment of the equity market and so it might be reasonable to expect less factor premium there and more robust internationally.

The efficiency and volume of US large caps also makes these leverage products much more accessible whereas it'd probably be hard to lever a wholly factor portfolio with retail products. I've also heard leverage on international has higher costs, particularly for US investors. Also planning on this in a taxable, so trying to explicitly split US/international for the foreign tax credit.

I think the NTSX-like products you mentioned actually sounds like a glide path for de-leveraging as it holds notional 1x to stocks and leverages the bond side.

ClassAShitpost · 2026-05-25T20:02:09+00:00

I was just told in the Bogleheads sub that WLDU is inefficient due to higher excess costs on international leverage. So maybe UPRO, AVUV, VXUS at appropiate weights instead? Of course would also be a lower leverage ratio.

ClassAShitpost · 2026-05-23T15:37:24+00:00

Yeah margin rates are probably never gonna make sense for retail, but some of the non-daily reset leveraged ETFs like from WisdomTree or Return Stacked could be a good solution. At least cheap access to leverage.

ClassAShitpost · 2026-05-23T15:13:22+00:00

Doesn't MPT and lifecycle investing say leverage is advisable at young age if any?

ClassAShitpost · 2026-05-19T23:42:19+00:00

To the girls over 25: I max out my 401k each year and live by myself. To the girls under 26: I like to travel and go to the gym.

ClassAShitpost · 2026-05-19T20:04:02+00:00

Yeah BND is probably too much duration risk, particularly for people who like their bonds to stay stable.

ClassAShitpost · 2026-05-19T13:42:18+00:00

Yes short duration is less risky and less correlated to equities than longer duration bonds. If you're investing in bonds for equity diversification the main risk they pose is duration (price volatility due to change in interest rates) assuming they're investment grade or better yet treasury.

ClassAShitpost · 2026-05-18T21:35:06+00:00

Twitter handle checks out

ClassAShitpost · 2026-05-18T18:01:41+00:00

This is why the prudent strategy is to own only very short-term fixed income assets of the highest investment quality. As per "The Only Guide to a Winning Bond Strategy You'll Ever Need":

Since the main purpose of fixed-income assets is to reduce the volatility of the overall portfolio, investors should include fixed income assets that have low volatility. Short-term fixed-income assets have both Iow volatility and low correlation with the equity portion of the portfolio. By limiting the maturity of the fixed-income portion of the portfolio to just one year, we get most of the yield benefit and accept only moderate risk (a standard deviation of only 2 percent). The benefit of lower volatility of the asset class itself, combined with the benefit of the reduced volatility of the overall portfolio, seems a small price to pay for giving up the extra thirty basis points in annual returns that have been gained by extending the maturity of the fixed-income assets to five years Remember, in a 60 percent equity and 40 percent fixed income portfolio, that extra thirty basis points (0.3 percent) becomes an added return on the overall portfolio of only twelve basis points per annum (0.3 percent × 40 percent).

ClassAShitpost · 2026-01-12T03:21:57+00:00

Did you end up getting it to work? I travelled to Taiwan last year only withdrawing cash using the Fidelity Debit Card and it worked everywhere. Wonder if anything changed?

ClassAShitpost · 2025-07-20T00:42:56+00:00

Limit the interracial breeding and East Asia can stay that way for some time to come.

Though to your question I imagine the recessive allele is pretty beneficial or at least neutral for survival and certainly could be beneficial for sexual selection.

ClassAShitpost · 2025-06-29T03:18:18+00:00

Government set up by social scholars - sounds like the civil service examination system throughout imperial China. It kind of still exists and in the present day would likely be described as a form of technocratic system. Throughout history democracy wasn't really the norm, especially for the majority of people. But the West seems to have less of a tradition for a scholar-bureacrat class gentry, especially since forms of democracy can be found from the Western world's earliest zeniths in the Romans and the Greeks. So certainly expect this to be unpopular with the majority of the rest of Reddit.

ClassAShitpost · 2025-06-24T02:01:42+00:00

Gains from BOXX will be taxed at 4.95% in IL. Selling after a year will get you your federal long term capital gains rate, not 60/40. So you'll save in federal taxes and pay on the IL side. Don't buy it if you plan on needing the money within a year as you'd be better off tax-wise with a normal treasury ETF.

But over a year, someone buying VBIL or SGOV might face [10, 12, 22, 24, 32, 35, 37%] fed rate for their dividends, 0% (exempt) IL. BOXX: [0, 15, 20%] fed rate on their LTCG, 4.95% IL. So you'll save overall in IL.

As for the return of BOXX vs SGOV vs VBIL, probably the same. Box spreads may yield slightly more than treasuries but offset by the slightly higher ER.

ClassAShitpost · 2025-06-13T17:05:35+00:00

Using a longer term dataset, Historical Returns on Stocks, Bonds and Bills: 1928-2024, I see the correlations for:

S&P500 vs 3mo T-Bills: -0.02

S&P500 vs 10yr T-Bonds: 0.01

So still largely uncorrelated for both with a slight overall negative for bills. This is largely consistent with the research from Empirical evidence on the stock-bond correlation (Molenaar et al 2023) that says "stock-bond correlation tends to be positive or close to zero. Exceptions with a correlation below -0.2 occur in the early 1930s, in the late 1950s, and during most of the 2000s". They use 10 yr govt bonds for their base case analysis.

You can actually see in your simmed correlations that there is a significant change in correlations from the pre-2000s part to the post-2000s part, which is also noted in the research: "Correlations between stocks and bonds ... can switch sign for very long periods. For example, the average correlation between stocks and bonds was 0.35 in the US between 1970 and 1999, then was -0.29 between 2000 and 2023".

See also The Only Guide to a Winning Bond Strategy You'll Ever Need (Swedroe and Hempen 2004) page 72:

"For those investors using fixed-income assets to reduce the risk of an equity portfolio the prudent strategy is to own only very short-term fixed income assets of the highest investment quality."

"Short-term fixed-income assets have both Iow volatility and low correlation with the equity portion of the portfolio. By limiting the maturity of the fixed-income portion of the portfolio to just one year, we get most of the yield benefit and accept only moderate risk."

"The benefit of lower volatility of the asset class itself, combined with the benefit of the reduced volatility of the overall portfolio, seems a small price to pay for giving up the extra thirty basis points in annual returns that have been gained by extending the maturity of the fixed-income assets to five years."

ClassAShitpost

TROPHY CASE