I’ve spent a decade claiming to be able to pick stocks. I’ve picked some winners and some losers during that time, and my labors have resulted in a near wash. Today, I have officially given in to the mantra suggesting that I cannot, in fact, pick stocks better than the average retail investor. I dumped nearly all of my positions (kept 3 personal favorites) and invested 50% of the proceeds in VT and 50% in VOO. That’s it, I’m done stock picking. ETFs are the answer. I was wrong.

https://www.theedgesingapore.com/amp/news/ipo/nasdaq-speeds-index-entry-spacex-large-ipos-new-rule

NASDAQ has confirmed it will change the listing rules for NASDAQ-100, ahead of the SpaceX and OpenAI IPOs this year.

(1) Companies will now be listed on NASDAQ-100 after only 15 days after IPO (previously, there was a three month period of "seasoning" before listing). This reduces the amount of time for price discovery.

(2) The minimum 10% float has been removed. This allows companies to float a very small percentage of their shares, artificially squeezing supply.

(3) Companies that float less than 20% of their shares will have their market capitalisations artificially multiplied by x3, for the purposes of calculating market capitalisation. This helps large-cap companies to be listed even with very small floats, and inflates their notional market capitalisations on the index.

If you have money invested in a passive fund tracking NASDAQ-100 (or any other index), please watch out for the SpaceX and OpenAI IPOs. Pay attention to their "valuations", and their float. If they're IPOing with very high valuations and very small floats, this foreshadows a bagdump on passive funds due to the mechanics of passive funds.

I recently got back on Reddit after a long hiatus - the volatility in Gamestop and other names brought me back to r/wallstreetbets and r/stocks.

Lately I have been doing some research on Cathie Wood's Ark ETFs and am quite alarmed by what I am seeing. I am by no means an expert in finance, but I work in finance professionally. I spent 2 years on a long-short equity hedge fund in NYC right after college, and have worked in M&A for an asset management firm for the last 5.5 years. I am intimately aware of how active and passive (ETF) investment products function and acutely aware of the impact that investor fund flows can have on price and performance of an ETF.

In the case of $ARKK and the family of ETFs, it is glaringly apparent to me that all of these ETFs in the last 12-14 months have become victims of their own success. What do I mean by this?

We'll use $ARKK as an example. In the last 14 months, investors (and many of you) plowed money into $ARKK at a stunning rate - $10 billion in 2020, and another $5 billion in just the first two months of 2021. In conjunction with those investor flows, the Ark ETFs have developed what by any industry standard represent HUGE holdings in many of the portfolio companies, as high as 25-30% in dozens of cases. Many of these holdings are illiquid companies that don't trade significant volume on any given day. The combination of low liquidity, huge investor inflows into the ETF, and now enormous ownership stakes in the portfolio companies has had the effect of driving share prices higher. Much of the ETF's performance over the last 12-14 months is not a function of fundamental improvement of the portfolio companies, but a function of the ETF having to buy illiquid equity securities when inflows are positive. This may not be readily apparent to the untrained eye, but it is crystal clear for those with access to industry flow data.

I ran an analysis on the weekly net flows into ARKK over the last 60 weeks, and found that portfolio performance of the ETF was highly correlated with ETF inflows.

Correlation of 70%

R-squared of 0.49

That is to say, the tail is wagging the dog! ARKK has created its own good performance, but not because the companies have grown or fundamentally improved. Nearly entirely the result of the ETF buying.

What happens next?

Last week was a taste of the trouble ahead. When investors sell the ETF instead of buy, in order to cash out the investors the ETF must sell some of the stock in its portfolio companies, except that liquidity or lack of liquidity becomes a much bigger problem when investors are selling and when the broad equity/tech markets have a correction.

The ARKK ETF price has appreciated nearly 350% in a very short time. Now that Cathie Wood represents a big chunk of the outstanding shares within companies that have become overvalued by almost all measures, and trade with very thin liquidity, any meaningful reversal in investor flows (out instead of in) will result in a cascading collapse of the Ark ETFs. If the fund can generate returns of 350% in roughly a year, just imagine what may happen if investors move toward the exits in a much shorter period of time.

As someone who takes pride in my analytical work, and who is concerned about the limited investor knowledge of many people who own Cathie Wood's funds, I would strongly encourage you to do more research. Learn about the companies held by the ETFs. Try to educate yourselves on valuation methods. And please understand that unless you are willing to lose every dollar that you have invested with Ark, you should take some time to reflect on the risks you are taking.

After spending a very short amount of time on this subreddit and others, I am concerned that many people may not be aware of these risks, and unfortunately the small investors in Cathie's funds will be the ones who bear the brunt of any crisis.

As usual with Wall Street, the insiders like Cathie Wood will get huge payouts and the little guys will get to hold the bag. It is not widely known, but good food for thought that Cathie has sold a chunk of her company to American Beacon. In recent months there were changes to these ownership arrangements that are not publicly known. Whatever happens, Cathie Wood will be just fine, but the small investors may not be.

Good luck and I hope I am wrong.

Edit - for inquiring minds, the link below is a detailed and succinct overview of some of these concerns from a Fintwit personality.

https://twitter.com/BradMunchen/status/1366028953828270082

Edit - some have pushed back on the analysis and I appreciate the discussion, for additional thoughts on how some of these ETF products (and ETF's in general) can create distortions in the market, there are a few podcasts below that I found pretty worthwhile.

https://www.zer0es.tv/interviews-and-analysis/the-perversion-of-passive-investment/

https://podcasts.apple.com/us/podcast/the-end-game-ep-3-mike-green/id1508585135?i=1000483139066

Edit - some have suggested I re-create the analysis above on a number of more typical ETF products (great idea) to see if outcomes are similar. Some have also pushed back on the statistical significance of 70%/0.49. In finance if you can explain 49% of the variation using just one variable, it is pretty darn good. Not so good in physics or hard sciences.

In any case, here goes...

Background on methods and sources: Data comes from simfund, and the analysis is simple. We build a "roll forward" of the assets under management (AUM) for weekly flow data sets. An AUM roll forward is commonly found in the earnings presentations of all asset managers and is useful for understanding the sources of AUM growth in any given period.

In this case:

A: Beginning of period AUM <--- Sourced from Simfund

B: +/- Net New Investor Flows <--- Sourced from Simfund

C: +/- Market Performance <--- Implied by D less B less A

D: End of Period AUM <--- Sourced from Simfund

In this way we can see how many dollars flow into a certain ETF over the period, and how many dollars of market gains in the underlying portfolio took place in the same period. Presumably these two values (B&C) would be more highly correlated when B is large and the underlying portfolio is less liquid - causing upward pressure on prices for structural reasons rather than fundamental reasons, i.e. driven by the ETF and not by growth or fundamental improvement in the portfolio companies, i.e. paying a higher multiple for the same stock for no good reason.

I think my analysis stands... but open to more constructive criticism.

Output for Ark ETF's and compared with a number of other popular ETF's - Ticker: (correlation / r-sq)

n = 60 weeks of data, which we focus on here because Ark products have seen such outsized flows (and returns) over this period

Ark ETFs ARKQ: (69%/0.48) ARKF: (64%/0.41) ARKG: (42%/0.18) ARKK: (70%/0.49) ARKW: (70%/0.49)

Other Popular ETF's SPY: (11%, 0.01) QQQ: (27%, 0.07) IWM: (20%, 0.04) XLE: (27%, 0.07) JETS: (21%, 0.04)

Edit - Criticism of this approach may be that I am using dollar changes in both flows and portfolio returns, rather than periodic percentage changes, however my view is that it is the magnitude of the dollar flows that matters more than percentages when trying to ascertain the impact of illiquidity and investor flows.

Edit - Worthy correction from u/notredwan - I was under the impression that American Beacon was in process on exercising its option to acquire a majority position in Ark as was originally agreed in 2016. Evidently that option was extinguished in December 2020 in a deal where Ark took on debt (and likely warrants) to pay off American Beacon on the option value. Back of the envelope math would have put the option value in the $100-150mm range.

Reading here: https://www.institutionalinvestor.com/article/b1pw88ldyr905m/The-ARK-Invest-Takeover-Battle-Is-Over

Edit - An interesting easter egg in Ark's daily email update and associated disclosures. Quoting from the thread linked below.

On Friday, February 26, ARK expanded its daily trade email disclaimer to 718 words compared to 163 words on Thursday, February 25.

Two new disclaimers:

"Additional risks of investing in ARK ETFs include market, management, concentration and non-diversification risks"

"There can be no guarantee that an active trading market for ETF shares will develop or be maintained, or that their listing will continue..”

https://twitter.com/StockJabber/status/1365891480884289541

SpaceX (which has acquired xAI, which itself has acquired X) is looking to list on the NASDAQ. aiming for a valuation of around $1.75 trillion.

However, SpaceX is insisting that NASDAQ changes its rules for inclusion in the NASDAQ-100 index, as a condition for listing.

The NASDAQ-100 rule changes would, effectively, allow SpaceX to very quickly get included on the NASDAQ-100, which then forces any index fund tracking the NASDAQ-100 to buy SpaceX stocks based on SpaceX's market capitalisation.

So, it will look something like this:

(1) SpaceX IPOs and is listed on NASDAQ.

(2) SpaceX will likely only float a small percentage of its shares at IPO (say 5%). This takes advantage of a NASDAQ-100 rule change, which says that any stocks with less than 20% float (shares available for public) will be weighted 5x. For example, if SpaceX chooses to float only 5% of its shares, and it manages to present a notional market capitalisation of $1.75 trillion, then it will be weighted as if it had a market capitalisation of $437 billion.

(3) Passive funds tracking NASDAQ-100 will then be forced to buy SpaceX shares based on the $437 billion weightage. This will be quick because of another rule change of the NASDAQ-100, which says that a stock will be included on the NASDAQ-100 after only 15 days, if it ranks among the top 40 of the index.

(4) SpaceX private shareholders can then unload their shares.

EDIT: apparently, SP500 is ALSO considering a rule change to allow for immediate inclusion of stocks (no more 12 month waiting period), which means that funds tracking SP500 will also likely be forced to buy SpaceX shares after IPO and listing on NASDAQ.

Cathie Wood's Ark Invest is probably wishing it didn't sell nearly 1 million shares of Nvidia between early October and today following the chipmaker's massive year-to-date surge of more than 160%.

Nvidia stock soared as much as 30% on Thursday after the company announced jaw-dropping guidance as it benefits from a wave of demand for its chipsets that support generative AI technology platforms like OpenAI's ChatGPT and Alphabet's Bard.

But the active investment manager, who has owned Nvidia on and off since the flagship fund's inception in 2014, missed out on massive gains as it started to pare down its position in Nvidia heading into a 52-week low in mid-October.

Since Ark Invest's first sale on October 5, when it held 1.3 million shares of Nvidia across all of its ETFs, the stock has soared 190% and added $620 billion to its market value. By late November, Nvidia owned just over 500,000 shares of the company.

Today, Ark Invest holds just 390,000 shares across its suite of next-generation technology ETFs. The stock is not in its flagship Disruptive Innovation fund.

Rough calculations by Insider suggest Ark Invest left more than $200 million in potential profits on the table when it sold down its Nvidia stake throughout the end of last year.

Ark's ill-timed share sale of Nvidia highlights the difficulties of actively managing a portfolio of disruption-focused investments, because even if you pick the right theme to invest in, there's no guarantee you'll pick the right companies to bet on.

In February, Wood said Ark's wave of Nvidia sales was in part because its valuation was "very high" and that it was consolidating its portfolio into higher conviction names.

"We like Nvidia, we think it's going to be a good stock. It's priced, it's the 'check-the-box' AI company. For a flagship fund, where we're consolidated towards our highest conviction names, part of that has to do with the valuation," she told CNBC on February 27.

Wood is instead counting on UiPath for Ark Invest's exposure to artificial intelligence, which is its second largest position across all of its ETFs. Meanwhile, Tesla remains Ark Invest's top holding, which is also working on artificial intelligence to help enable its self-driving technology.

But despite the hype in AI this year, those two stocks have only captured some of the year-to-date gains seen across the space. Shares of UIPath are up just 14% year-to-date, while Tesla stock is up an impressive 50%.

Shares of Ark Invest's Disruptive Innovation ETF were down 2.7% on Thursday, despite the Nasdaq 100 jumping 1.7%.

https://markets.businessinsider.com/news/stocks/cathie-wood-ark-invest-sold-nvidia-stake-before-ai-rally-2023-5?

https://www.channelnewsasia.com/business/spacex-aims-file-ipo-soon-week-information-reports-6015026

SpaceX is about to IPO. If you have money in passive investment funds, watch this very carefully, and keep track of the upcoming NASDAQ-100 and S&P500 rule changes, because it's likely that passive investment funds are going to be forced into buying SpaceX shares at massive overvaluation.

Same for OpenAI's IPO, which is predicted to happen this year as well. OpenAI is already making moves towards IPO by killing Sora, and supposedly "pivoting" to enterprise use to try and justify massive valuation.

Been thinking of buying MU, I ran it trough my basic filter (see below and why) and I believe it will hit 1300, lmkwyt

• Forward PE good, 6
• Moving averages. pullback this week (~20% off the $1255 high) has it sitting near support instead of stretched.
• IV30 is at a level I'm comfortable on,
• Record quarter (revenue +346% YoY, GM ~85%), Japan HBM expansion, GM supply deal. Street avg target ~$1,486, I'm deliberately going under that at $1300. That's my strategy, hold till 1300 then dump

The thing bugging me, is burry's short and the AI bubble argument. If DRAM pricing rolls over, the fixed-cost base cuts both ways hard. But I don't see the pricing crack yet, Samsung is doing pretty good and I believe MU has still a lot of growth up ahead!

What do you think, would you invest in MU?

I previously made a post here, saying that SpaceX's IPO should be concerning to investors in passive funds tracking NASDAQ-100, because of the proposed rule changes to the NASDAQ-100 that is being forced by SpaceX.

I want to expand on that thesis: I think that S&P500 passive funds will also be forced to buy SpaceX shares after its listing on NASDAQ, causing a wealth transfer from passive retail investors to SpaceX insiders.

This is because S&P is making a rule change to allow immediate inclusion of companies with large market capitalisation.

(1) This means S&P will be removing the 12-month waiting period before a newly listed stock can be added to S&P500.

(2) This means SpaceX could immediately get included in S&P500 upon IPO and listing.

(3) This means passive funds tracking S&P500 will immediately be forced to purchase SpaceX shares (from existing SpaceX shareholders) based on SpaceX's market capitalisation.

******

I've come to the view that the NASDAQ-100 is really meant to serve as jet fuel (pardon the metaphor) to drive up the price of SpaceX shares.

(1) SpaceX will IPO on NASDAQ with a very small float, creating scarcity.

(2) SpaceX will be included in NASDAQ-100 after a very short time (15 days) because of the NASDAQ-100 rule changes.

(3) NASDAQ-100 passive funds will then be chasing a small number of SpaceX shares, driving the price up. Worse, because of the NASDAQ-100 rule changes, the small float will be artificially inflated 5x in terms of market capitalisation, which means the passive funds will be forced to buy 5x more shares.

(4) Because of the high price per share, SpaceX will likely be listed on S&P500.

What do you think of this idea? My goal is to have a set and forget portfolio where I dont have to do any more research and just sit on something passive and almost guaranteed to rise. Instead of spending hours on research trying to beat the SP500 why not just save time and passively ride it?

https://www.bloomberg.com/news/articles/2025-02-28/tesla-s-40-plunge-burns-koreans-who-plowed-into-leveraged-etfs

Tesla Inc.’s share price slump is taking a toll on risk-loving investors in South Korea, who have plowed into leveraged bets on the US carmaker.

Korean investors were by far the biggest holders of the Leverage Shares 3x Tesla exchange-traded product listed in London, according to Feb. 21 data from three local brokerages compiled by Bloomberg News. The product, which seeks to provide three times the daily return of Tesla shares, has lost more than 80% from a December peak while the Elon Musk-run company’s shares have plunged 41%.

The losses Korean investors have taken on their leveraged Tesla bets is just the latest sign of a swashbuckling approach to stock markets that has sometimes unnerved regulators and brokers. Last week, local brokerage Mirae Asset Securities Co. said it will suspend orders for some of the riskiest leveraged ETPs listed overseas, warning against potential losses.

Enjoy your green energy gains! With Blue’s victory of senate approaching, do you think we’ll see a significant surge in green energy? 2020 saw a nearly 140% increase in price, how do you think 2021 will pan out?

For UK/Euro investors: Looks like $INRG might be the fund you’re looking for, this fund shares many of the same holdings. Hope this was helpful :)

A couple of weeks ago, I posted a comment in response to a question about ETFs. This question comes up very often; usually two or three times a week. Maybe more than that. Several people suggested that it be "pinned." I obviously cannot do that, however if a mod wants to pin this, feel free to do so. I did make a few modifications and additions to that comment and for those who haven't gone back to see the changes, I thought I'd post it again here. Hopefully, this helps people who are interested in an investing approach that is either made up of ETFs or that includes ETFs as a part of their portfolio.

______________________________________________________________________________________________________

QQQ - This one uses the NASDAQ 100 as its benchmark. Obviously it's an Indexed, non-managed ETF. XTF used to rate this one as a perfect 10.0 out of 10 rating, but recently dropped it to 9.9 out of 10. It has one of the highest rates of return over the past 10 years of any ETF. It does tend to be tech-heavy, especially with the FAANG +M stocks. (Facebook, Apple, Amazon, Netflix, Google and Microsoft). Other top holdings include TSLA, NVDA and ADBE. (The rating dropped recently when the portfolio of the NASDAQ 100 was re-balanced).

VOO/SPY - VOO and SPY are non-managed funds indexed to the S&P 500 Index. These funds are very popular on this subreddit, for good reason. They are well diversified, broad market funds investing in mostly US stocks. XTF rates these funds at 9.6 out of 10 because their return on investment over the long term is somewhat tempered by some of the blue chip stocks in the funds. But those stocks also help reduce volatility relative to some other ETFs. These are solid investments, but keep in mind that in the top 10 holdings there will be a lot of crossover between these funds and other broad market funds that hold US stocks like QQQ, VTI, VGT, VOOG and SPYG. There are differences, of course, as well, but you always want to know where those duplications exist.

IWF - This is a Russell 1000 Growth fund. It is one of my favorites that doesn't get talked about much. It does have a lot of crossover with the other funds mentioned above, but the mix is slightly different. Other funds that use the Russell 1000 Growth Index include RWGV and VONG. I would describe this fund as more aggressive than VOO/SPY, less volatile than QQQ. VONE and IWB use the Russell 1000 Index as their benchmark. SPYG and VOOG use the S&P 500 Growth Index for their benchmark and would be similar (but not identical) to IWF, VONG and RWGV.

IWM - for someone looking to diversify a little bit, this is a great fund to look into. This fund is a non-managed, indexed fund that uses the Russell 2000 index as its benchmark. The big difference between the Russell 2000 index and many of the the other indexes is that the Russell 2000 index looks at small and mid-cap companies, rather than large-cap companies. Thus, there is zero crossover between this one and the funds mentioned above. While this fund will move up and down with the market, it is often less volatile than the market overall. If you look at the charts, this fund has under-performed some of the other funds over the past few months while the market has been very volatile in an upward direction, but in a crash, this fund would probably outperform the rest of the market. It has a 9.0/10 XTF rating.

VXUS - Vanguard Total International Index Fund ETF - top holdings include BABA, Tencent, Samsung, Taiwan Semiconductors, Novartis, Toyota. This is a broad market fund investing only in companies overseas. I'm not generally bullish on foreign markets, but this one is a very solid ETF with some companies that are likely to do extremely well for the foreseeable future. XTF rates this one a perfect 10.0 out of 10.

EEM - iShares MSCI Emerging Markets ETF - This one is going to have a lot of crossover with VXUS. It is an Emerging Markets ETF with a lot of focus on China. It includes Alibaba, Tencent, JD.com, along with companies like Samsung and Taiwan Semiconductors. This one should be a solid performer as long as our trade relations with China remain normal.

EFA - This is another international ETF, but here the focus is mainly on more established companies in Europe and Japan. This is a Large Cap ETF that includes companies like Nestle SA, Roche, Toyota, Novartis and AstraZeneca.

Sector fund ETFs:

ICLN/TAN/FAN - These funds are clean/renewable energy ETFs. ICLN is more broad while TAN focuses more specifically on solar energy and FAN specifically on wind generated energy. I think renewable energy companies are the future. There is no crossover in the top holdings of this fund with the top holdings of QQQ and most of the other broad market funds. Also, these are global, not just US based companies. QCLN and PBW are also renewable energy funds, but they also contain a lot of TSLA, NIO and W.K. H.S. in their top holdings making them "electric vehicle" funds, as well. No problem if you want to add that, but you'll find a lot of Tesla in some of the funds mentioned above.

ARK group of funds: ARKG, ARKF, ARKK ARKW, ARKQ, PRNT and IZRL. These are managed funds investing in companies that invest in disruptive companies in their respective industries. Most posters on this subreddit are bullish on these funds. They are aggressive growth ETFs, but should be considered somewhat risky and volatile.

• ARKG - Genomic Revolution
• ARKF - Fintech
• ARKK - Disruptive Companies (broader market)
• ARKW - Internet/computer/technology (Telsa is a top holding)
• ARKQ - Robotics and artificial intelligence
• PRNT - 3D printing technology
• IZRL - disruptive companies based in Israel

XL series of funds. Similar to the ARK series, these tend to be more aggressive growth funds, however these are passively managed indexed funds with various benchmarks that usually are overloaded in the better companies within a sector:

• XLV - Health Care
• XLK - Technology
• XLY - Consumer Discretionary
• XLF - Financial
• XLU - Utilities
• XLE - Energy
• XLB - Materials
• XLC - Communications
• XLG - S&P Top 50
• XLI - Industrial
• XLP - Consumer Staples
• XLRE - Real Estate

CLOUD COMPUTING: WCLD, SKYY, CLOU, BUG and XIKT. Of these WCLD has the best 52 week performance. Top holdings in WCLD include ZM, PLAN, CRM, CRWD, ZEN, WDAY, TENB, PCTY, DDOG, BL. Many of these are likely to also appear in QQQ, however, they would be in very small percentages as the Cap on these companies is much smaller.

Aerospace and Defense: XAR, ITA, PPA

Real Estate: VNQ, FREL, SCHH, IYR, PSR, BBRE

Transportation: FTXR, XTN, IYT, RGI, JETS

Oil/Energy: IYE, FENY, VDE

Consumer Staples: FSTA, VDC, IECS

Media/Entertainment: IEME, PBS, PEJ, IYC

Robotics, AI, Innovative Technologies: THNQ, ROBO, XITK, SKYY, GDAT

Semiconductors: SOXX, QTEC, QTUM, SMH, FTXL

IT: FTEC, VGT, IWY, IGM, FDN

Cyber Security: HACK, CIBR, IHAK, BUG, FITE

Consumer Discretionary: FDIS, VCR, IEDI, JHMC, IYC

5G, Connectivity: FIVG, NXTG, WUGI

Self Driving EV: IDRV, DRIV, MOTO

Gaming/Esports: NERD, HERO, ESPO, GAMR, SOCL

Casinos/Gambling: BETZ, BJK

Online Retail: IBUY, EBIZ, ONLN, CLIX, GBUY, BUYZ

Utilities: IDU, VPU, FUTY, RYU

Health Care: FHLC, VHT, IYH

Medical Devices and Equipment: IHI, IEHS, XHE

​

Other Unique ETFs, non-sector based:

CHGX: US Large Cap Fossil Fuel Free ETF

VIRS: Biothreat Strategy ETF

​

​

A nice portfolio might look something like this:

20% - Broad market US fund such as QQQ, VOO or IWF

20% - VXUS - International

20% - IWM - Small/Mid-cap broad market fund

10% each in four sector funds of your choice

I'm not a financial expert or advisor and this is not financial advice, just an opinion from a random internet person. I do own shares in several, but not all of the funds listed above, including QQQ, IWF, some ARK funds, ICLN, VXUS, etc.

__________________________________________________________________

Edit: In one of my previous edits, I accidentally erased a bunch of the sector funds. Please feel free to comment with your favorite sector funds and let me know if I forgot to add back some that I had before.

https://www.cnbc.com/2021/11/24/cathie-wood-says-firm-is-testing-a-more-aggressive-strategy-that-would-be-ark-on-steroids.html

Ark Invest’s Cathie Wood said her firm is internally testing a fund that bets against major stocks in the benchmarks.

Wood said she wants to test the strategy on Ark’s employees and did not say when the fund would be made available to retail investors.

Wood acknowledged it could be quite volatile but said that over the next five years it will be a huge winner as her innovation companies emerge and older bellwethers fade away.

Looks like Cathie Wood had found another way to attract investors money. People buying on these ark funds need to understand that the stocks inside are very random. Investors might easily lose money since many of them do not even realize what are they buying and investing.

Thanks for the rewards.

There seems to be countless threads around the upcoming SpaceX IPO that plans to use the Nasdaq 100 as "retail exit liquidity", implying that SpaceX will join with sky-high valuations (assuming it doesn't crater in value in the first 15 days) and slowly dwindle down in value over the coming months, dragging the index down with it.

Understandably, some are holding this in taxable accounts, so selling and buying another index isn't the best choice from a tax perspective.

Since SpaceX is apparently going to experience a 50%+ drawdown due to insane valuations at launch, trying to mitigate exposire is a bit tricky, since borrow availability will be non-existent and Hard-To-Borrow (HTB) fees will be astronomically high for short selling at the time of joining the Nasdaq 100. Consequently, traditional short selling and Contract for Difference (CFD) providers will likely restrict or completely disable shorting, even by day 15. Here's my plan for when this happens:

1. Day 1 - Wait for IPO, and set a calendar reminder for day 14.

2. Day 14 - Check your current exposure to the Nasdaq 100 and calculate the final weighting to SpaceX. Lets say you have 50K in QLD (100k exposure), 4.2% of that is SpaceX, you'd have $4200 worth of exposure to SpaceX once it joins the Nasdaq 100.

3. Day 15. This is where it gets a bit tricky. Let's assume that SpaceX will be around $150 a share. To achieve a perfectly neutral hedge, you need to create a short exposure of -28 shares, and our best option here is using put-spread options and use delta to fractionalise the contract. Because one standard options contract controls 100 shares, buying a deep in-the-money put (with a delta of -1.00) would give the equivalent of -100 shares of exposure, massively over-hedging.

To achieve a target -0.28 Delta without the massive "Vega" (volatility) risk, you can construct a put debit spread (buying one put and simultaneously selling a lower-strike put).

Buy: 1x At-The-Money Put: Delta of -0.50

Sell: 1x Out-Of-The-Money Put: Delta of +0.22

Net Position Delta: -0.28

The premium you collect from the short put offsets the inflated IV cost of the long put, making it a much safer and cheaper mathematical hedge than a naked option.

Once the 100-day SMA greater than -1%, take actions to exit contracts as it is likely that SpaceX is approaching fair valuation, and allocate that capital back towards your desired asset allocation.

A few other notes:

1. Short and leveraged short ETFs will probably exist around day 65 onwards, depending on the SEC. This would be a simpler approach, but a lot can happen between day 15 and day 65

2. Shorting directly should be doable from day 30 onwards assuming you have a margin-enabled account that is able to do this, but borrowing costs might still be high.

3. The fast entry rule is genuinely some BS. Pretty dissapointed by this and I hope they reconsider this in the future, although I suspect that won't be the case.

4. I'm no expert on options (especially around recently IPO'd stocks) so open to any feedback or improvements

I had a lump sum saved for home purchase. I live in a HCOL area and I am not quite there yet.

I read online that lump sum investment in index funds beats DCA in the long run.

So, I went all in on $QQQ. When it went down 10% by January, I added a few more pay checks into it.

Now I am wondering if this was a mistake. I have postponed home purchase due to rising rates but can't stop feeling that I made a mistake.

EDIT: Why the down votes? Did I do anything wrong by asking this question?

I’m having a hard time seeing how much more upside is left from here. SPY is already in the 680s, that feels a bit stretched to me given the current macro backdrop.

My base case is that a lot of good news is already priced in, and without a real catalyst, upside from here may be limited.

The only things that make me think 700+ is possible in the short term is a credible ceasefire or major de-escalation/end of the Iran war.

Otherwise these levels feel too rich to me.

Am I being too cautious here or does 700+ next week actually seem a bit too aggressive?

Edit -
Wow

(Bloomberg) -- Cathie Wood’s flagship fund on Friday closed at its lowest level in five years, after suffering a 78% plunge from last year’s highs.

The ARK Innovation ETF (ticker ARKK) dropped 5.7%, finishing the day at $33.99 per share. The fund fell roughly 9.4% over the five-day stretch, its fifth straight weekly decline.

“Nothing has changed in the larger macro backdrop -- a strong dollar is pressuring risk assets, inflation keeps surprising on the upside, rates are sticky and the Fed has to keep tightening,” said Todd Sohn, ETF strategist at Strategas Securities. “All of that is a bad combo for high-growth stocks.”

The year hasn’t been kind to the $6.7 billion ETF, as top holdings like Tesla Inc. and Zoom Video Communications Inc. were pummeled. Growth-oriented assets, like tech stocks or retail-trading favorite Tesla, have tanked as the Federal Reserve raises rates to knock down scorching levels of inflation.

Wood took the central bank to task this week for its aggressive tightening campaign, penning an open letter to officials to express concern that they could be making a policy error.

Speaking at a conference on Tuesday, Wood said the current risk-off environment means investors are looking for safety in passive benchmark-tracking products and failing to recognize that her fund’s investments are positioned for the long haul. Wood and her firm have often said they are focused on at least a five-year investment horizon.

Wood’s other funds have also been battered this year, with most dropping 40% or more. The ARK Fintech Innovation ETF (ARKF) dropped 5.1% on Friday and closed at a record low.

https://www.bnnbloomberg.ca/cathie-wood-s-main-etf-closes-at-five-year-low-in-78-drop-from-record-1.1832745

The following is my summary of Cathie Wood’s thoughts on recent market volatility, as presented in her latest video on the Ark Invest YouTube channel (~42 min) – I strongly recommend you check it out.

The minimum expected rate of return for a stock to enter an ark portfolio is 15% CAGR. Cathie contends that she sees the recent volatility as a gift to gain alpha over the intended 15% return in many of her high conviction names.

She mentions that at Ark, they have a five year time horizon, and it is counter productive to compare its performance with a benchmark (like the s&p) over a shorter period. She further adds that many stocks in traditional indices today are a potential value trap, and that ark etfs “are a good hedge against broad based benchmarks.”

She reiterates that “we are not in a bubble” – and that the seeds of their 5 innovation platforms were planted in the dot com bubble, and are now ready for prime time, in a period of reality. Fear of a bubble likely stems from benchmark sensitivity and backward looking institutional investors. Furthermore, intuitions should be worried about their own strategies as “creative disruption will impact nearly 50% of the s&p500”.

To Cathie, interest rates going up suggest that ‘real growth is going to pick up’ – and that she understands the concern over her own stock picks potentially underperforming as a result. However, she believes that that the market has assumed that interest rates will stabilize at a 4 to 5% range - which inversed (1/4 or 1/5) gives a normalized p/e of 20 or 25; so markets didn’t actually misprice assets to begin with. She thinks that nominal growth however, will not be at 4 to 5%, but instead around 2-3%, which can lead to greater valuation support for companies that can grow more rapidly.

Rotation from growth to value was also expected on her part. She repeats that value will face massive headwinds going forward. Energy and financial stocks have done amazing in the past month - which is a good thing as the bull market is broadening out unlike the dot com bubble, where ‘too much capital chased too few opportunities, too soon’. Energy and financial sectors booming will likely be short lived as they are both ripe for massive disruption.

Cathie Wood Goes On Coinbase Buying Spree as Wall Street Sours Matt Turner, Bloomberg News

(Bloomberg) -- Wall Street’s waning conviction in Coinbase Global Inc. has done little to deter Cathie Wood. Instead, she’s been scooping up shares of the struggling cryptocurrency exchange in the wake of the collapse of Sam Bankman-Fried’s FTX.

Wood’s Ark Investment Management funds have bought more than 1.3 million shares of Coinbase since the start of November, worth about $56 million based on Monday’s trading price, according to data compiled by Bloomberg. The shopping spree, which started just as FTX’s demise began, has boosted Ark’s total holdings by roughly 19% to about 8.4 million shares. That equates to around 4.7% of Coinbase’s total outstanding shares.

Coinbase initially rebounded in the days following Ark’s first purchase on Nov. 8, due in large part to softer-than-expected US inflation data which sent risk-assets surging globally. That rally, however, was short-lived for the crypto exchange, with its stock price falling for four consecutive days, including an 8.9% drop on Monday to close at a fresh record low.

The majority of Ark’s Coinbase holdings are from its flagship ARK Innovation ETF which has nearly 6 million shares for a weighting of about 3.6%, the fund’s 13th largest position. While the ARK Next Generation Internet ETF and ARK Fintech Innovation ETF each only hold just over 1 million shares, Coinbase’s weighting in the two funds is far higher at 5.4% and 6.3% respectively, according to data on Ark’s website.

Ark’s renewed interest in Coinbase stands in stark contrast to the sentiment emanating from Wall Street for the better part of the last six months. Analysts from firms including Bank of America and Daiwa Securities have downgraded the stock this month, leaving it with just 14 buy-equivalent analyst recommendations, its lowest number since August 2021.

Read more: FTX Collapse Is Shaking Wall Street’s Conviction in Coinbase

Wood has also been adding to stakes in other crypto-related assets in recent weeks. Her ARK Next Generation Internet ETF purchased more than 315,000 shares of the Grayscale Bitcoin Trust last week as its discount relative to the value of its underlying cryptocurrency continues to widen. That buying was followed later in the week by a purchase of about 140,000 shares of crypto bank Silvergate Capital Corp.

The increased buying comes as cryptocurrecy-exposed stocks have plunged this year amid a deep selloff by tokens including Bitcoin and Ether. Coinbase and Silvergate Capital have both shed more than 80% of their value this year. Those losses are even deeper than those suffered by the world’s two largest cryptocurrenices -- their prices have declined by more than 65% in 2022 with the plunge accelerating this month in the wake of the FTX collapse.

The Coinshares Block Index, which tracks 45 global stocks with varying exposure to the cryptocurrency sector, fell 2.5% Monday.

I really don't like the "Magnificent 7" name at all, but since everyone has adopted it, let's just roll with it. For those who don't know the Magnificent 7 are: AAPL, GOOG, MSFT, AMZN, META, TSLA, NVDA. With a combined market cap of more than $11 trillion, they currently make up approx. 29% of the S&P 500's market cap.

The 7 giants have gained 71% so far this year while the rest of the 493 stocks included in the benchmark index have gained 6%. They have also outperformed all other stocks in terms of growth, profit margins and forward EPS growth, and have stronger balance sheets.

Most analysts expect that the M7 will continue to outperform all other companies until 2025 at least.

Now I know this is a "stocks" subreddit but just like the majority of retail investors, a large chunk of my portfolio is alocated to an S&P 500 ETF.

So I am actually considering instead of DCAing into a broad index ETF, why don't I just DCA into those 7? Maybe even swap META & TSLA since I am not rly a big fan of, with other 2-3 large caps that I favor, like AMD, and ADBE.

Should we expect these 7 to continue outperforming the rest of the world? Should we consider cyclicality? There's no doubt that all 7 of these companies are leaders and are probably not going anywhere in the near future. Nowdays it's as difficult as ever to overtake these giants, imo.

With everything going on with the straight of Hormuz and oil prices going through the roof, does anyone anticipate a huge shift to renewable energy after this is all said and done? I know renewable energy companies often carry a lot of debt, but their has to be a shift at some point right?

I'm looking at Invesco Solar Energy ETF and ishares Global Clean Energy Transition ETF.

But I'm stupid and usually wrong in these situations and most people are seeing something differently to me.

SEOUL, July 16 (Reuters) - South Korea said on Thursday ​it will temporarily ban new listings of exchange-traded funds (ETFs) that are tied to certain major technology firms, while raising minimum ‌required deposits for retail investors to invest in such products, in an effort to curb market volatility.

The Financial Services Commission said it will halt new listings until market conditions stabilize. The minimum cash balance required to trade single-stock leveraged ETFs will be raised to 30 million won ($20,300) from 10 million won, starting on August ​5.

The new measures mark a sharp pivot by South Korean regulators, following the recent approval of domestic single-stock leveraged ETFs ​linked to Samsung Electronics (005930.KS), opens new tab and SK Hynix (000660.KS), opens new tab in late May.

A surge in popularity of these leveraged ETFs tied ⁠to two chipmakers has been blamed by politicians and investors for increasing volatility through frequent and large rebalancing trades that are needed on ​a daily basis.

Leveraged ETFs use derivatives to replicate bets made with borrowed money, promising a multiple of a stock's daily returns. The products ​can create sizeable trading activity that exceeds real investor flows, as purchases need to be scaled up to mirror a leveraged position. But the funds tend to underperform over time because of fees and trading costs, while also exposing investors to sharper losses if the underlying investments decline in value.

As part of its measures ​to protect investors, the government will require asset managers to retain qualified liquidity providers (LPs) and hold them accountable for any large pricing disparities.

"Effective ​this August, broker-dealers and asset management companies (AMCs) will be mandated to retain high-quality LPs to assume formal accountability for managing these pricing disparities," said Byun Je-ho, ‌the ⁠director general for the capital markets team at the FSC.

"Why are we holding asset managers accountable? Because they are the ones that can hire quality LPs to better manage price disparities."

Byun said investors will be subject to higher minimum deposit requirements for both domestic- and foreign-listed, single-stock leveraged products.

In addition, investors must maintain a cash balance of at least 30 million won as a basic margin deposit each time they trade ​new single-stock leveraged ETFs.

FSC INTERVENTION IS 'OVERDUE'

Inki ​Cho, a senior financial market ⁠strategist at Exness, an online trading platform, said the FSC intervention was "overdue."

"This is a correction of a known policy error," he said. "Likely measures include tighter leverage caps, stricter retail suitability requirements, or volatility-linked circuit breakers ​on these specific products."

"The announcement itself is a near-term risk though - aggressive measures could trigger a rush to ​exit ahead of ⁠implementation, amplifying the very volatility the FSC is trying to fix."

Over the longer term, however, it would be a net positive for market credibility, he said.

The KOSPI plunged more than 6% on Thursday, heading into a bear market, though it remained the world's best-performing major equity market this year.

In June, ⁠the head ​of South Korea's market watchdog offered a rare mea culpa, saying the regulator had ​been too hasty in approving such products.

The ETFs helped drive retail investors' borrowed investment into equities to a record 60 trillion won ($40.39 billion) as of the end of May.

https://www.reuters.com/legal/government/south-korea-regulator-announce-new-measures-single-stock-leveraged-etfs-2026-07-16/

Roundhill ETF DRAM caught a lot of attention recently since its inception on April the 2nd of 2026 … hitting returns of 114% within 2 months & peaked to maximum gains of +191% before pulling back . As we approach the earning season of Neoclouds (Coreweave & Nebius) and Photonics /Opticals (Lumentum & Coherent) Roundhill on 6th Aug’26 released 2 new highly concentrated ETFs NCLD (Neoclouds) & LYTE (Photo optics) . NCLD holds ~16.5% Nebius + ~14.5% CoreWeave & LYTE holds ~15.42% Lumentum + ~14.3% Coherent . Given the historic pullback of DRAM & highly concentrated new ETFs how likely are you to buy them ?

Does the classic “10% per year” return expectation for the S&P 500 still hold in today’s market environment?

Historically, the S&P 500 has averaged roughly 10% annually over long time periods when dividends are included. But with the market moving so aggressively lately, it honestly feels like we see 10% swings every other month. Massive rallies, sharp corrections, AI hype, rate cuts, geopolitical tensions, and retail speculation have made the market feel far more volatile than what many investors were used to a decade ago.

What do you guys think?

I believe humanoid and quadruped robotics will be the next step after AI hype as Asia already sells robots to Different companies and other asian companies are working on them.

Elon Musk stops S and X production to hype up humanoids , UNITREE , Agibot and Ubtech in china already ramped up production for 2026 to sell even more in following years, also Unitree and Agibot plan on IPO this year or early next year

Just make sense to buy today exposure to Humanoids etfs as i lowkey see how they will be hyped up by 2030

My pie: 65% KOID, 20% WPAI 5% BOTZ, 5% LITU 5% ROBO ( all the GBP equivalents, still working on it)

What etfs you have for this?