Key insights
- The author argues that passive investing strategies are becoming unreliable due to the inclusion of unprofitable, highly-valued companies like SpaceF in major indexes. This trend, termed 'bubblenomics,' suggests a potential market bubble where investors may overpay for speculative assets. The piece warns of a future where index funds hold significant positions in companies with weak fundamentals, potentially leading to market corrections. The author also draws parallels to potential future scenarios involving AI companies like OpenAI and Claude Code.
With spaceF getting added to all the major indexes it’s clear that indexing can no longer be trusted. Soon inside all your retirement funds and index funds you will be paying 100 times sales for a company that is competing with Verizon and t mobile and ATT. A company that has never been profitable or shown any worthwhile metric will be a major holding. They all waved their white flags or got a payout. My money is on the latter. It will be an interesting case study in bubblenomics as OpenAI and Claude Code might do the same shortly.