The rocket went up, the investors went down.
I imagined a scenario where a retail investor has been watching SpaceX since its IPO day.
He loved watching rockets as a kid.
He didn't become an astronaut when he grew up, so he decided to participate in humanity's exploration of the universe in another way:
Buying stocks.
SpaceX surged after its IPO, but he thought it was too expensive and didn't chase the price.
Later, he heard it was about to enter the Nasdaq 100 Index, and he felt the opportunity had finally arrived.
Someone online explained:
After entering the index, a large number of passive funds must buy in.
After hearing this, he felt this wasn't investment logic.
This was a math problem.
Funds must buy, so the stock price naturally must rise.
Plus, Wall Street brokerages were giving bullish ratings one after another, with some target prices reaching $190, and some even seeing $300.
So he bought in before the Nasdaq 100 adjustment.
He told his friends:
This time, it's not chasing highs; it's ambushing ahead of the passive funds.
The result: on the first day SpaceX officially entered the Nasdaq 100, the stock price fell nearly 7%.
Not only did it fail to take off, but it also fell back near its opening price on the first day of its IPO.
He was confused.
Didn't they say index funds must buy?
Later, he finally figured it out.
The funds might indeed have to buy.
But the entire market knew a month in advance that the funds would buy.
The brokerages knew, the institutions knew, the quants knew, even the short video comment sections knew.
When something has already been considered a "certain positive" by everyone, the last person to know is often the retail investor about to click the buy button.
SpaceX didn't explode.
Rockets are still launching, satellites are still ascending, and analysts haven't immediately lowered their target prices.
The only thing that landed was his prematurely overdrawn expectations.
The most interesting thing about the capital market is:
Positive news that everyone knows about won't necessarily make a stock rise.
But it will definitely make many people buy in advance.
So when the positive news truly materializes, what the market might lack is not buyers.
But a new story.
Rockets can be reused and recovered, but the capital used for chasing highs may not be.
$SpaceX(SPCX.US)
$NASDAQ-100(.NDX.US)
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