Thunderbirds are GO

Today is the investment equivalent of finding out who shot JR. Or who wins Love Island. (Pick your demographic). It’s blast off day as SpaceX goes public in the biggest listing the world has seen. The $1.75 trillion question is: will the shares rocket or crash?

They will not crash on lack of demand. The Financial Times has reported that Musk’s hyped company has attracted orders for more than three times the available sum – driven by huge interest from retail investors and the institutional lot including fund managers,

Gulf sovereign wealth funds and hedge funds.

There is around $77 billion up for grabs (possibly more) and individual investors alone have reportedly submitted orders for more than $100 billion. This suggests us mere retail punters might only get about 25% of what we wanted.

I think the economics of this listing are hard to justify and it’s effectively the biggest collective global bet I’ve ever seen. But retail investors drive markets now in a way they never used to. If millions of people feel cheesed off, they didn’t get what they wanted – or get massive collective FOMO – then we could see the price pop when trading starts and then potentially fall quickly too if there are immediate decent profits to take.

The only thing which seems certain is that we’ll have a very volatile week, driven more by psychology than Maths. After the initial frenzy subsides, there will be more buying pressure coming in subsequent weeks as the indices start to add SpaceX to their line-up. FTSE Russell

has adopted a 5-day fast-entry rule, which makes it highly likely we will see SpaceX join the FTSE Global Equity Index Series, with possible effect from 22 June.

And then the Nasdaq

will follow after 15 trading days. Any reader who owns any fund pegged to these indices will own SpaceX by the time you pack your swimmers for the summer break.

This isn’t just a technical detail. Here’s one example of its impact – we’ve published May’s best-selling funds lists this week. Included amongst the best-selling funds is the Vanguard FTSE Global All Cap Index fund – and yes, this will probably own SpaceX pretty shortly, which will be intentional for some, and accidental for others.

In other market news, the volatility theme has continued this week, although Thursday saw stock market gains as hopes of a de-escalation in Iran rose their head again. Oil has fallen to a 2-month low. But for today, we watch and we wait.

Those who have applied for shares will see any allocations confirmed this morning. US markets open at 2.30 pm BST and then we’ll have a few hours of an “auction process” (carefully orchestrated chaos) and the first official trades will happen later this afternoon or early evening.

Anyone feeling decidedly bearish may like our new article on diversification and lessons learnt from two previous market crises. Not a bad antidote for all the froth and a decent reminder to balance greed with fear! It asks whether adding a dollop of bonds to a pot of shares is a good enough strategy anymore OR do we need to consider other ‘real stuff’ (such as infrastructure). It’s a very good question! Amidst all the asteroid mining hoopla, I think it’s quite nice to own a few things we could actually touch.

Have a great weekend, everyone.

Holly