Category: Daily Diary

“The danger is that once a company reaches sufficient scale, the distortion itself becomes systemic. Every passive fund has to own it. Every major index becomes dependent on it. Pension funds, retirement accounts, sovereign wealth funds, insurance companies and institutional portfolios all become increasingly exposed to the same trade. The higher it goes, the more unavoidable it becomes.

And that’s the part that nobody seems to understand. If SpaceX eventually reaches $10 trillion through a combination of hype, narrative, mechanical flows and options-driven feedback loops, it won’t just be a SpaceX story anymore. It will become the market. Its movements will increasingly dictate the performance of indexes, ETFs and retirement accounts across the entire financial system. The market will effectively become a referendum on a single stock.

That’s how bubbles become systemic. Not when they’re small enough to laugh at, but when they become so large that everyone is forced to participate. The same mechanisms pushing prices higher today eventually create the conditions for instability tomorrow. When trillions of dollars of wealth become tied to a valuation that was never anchored to fundamentals in the first place, even a modest reversal can have consequences far beyond the stock itself.”

– Excerpt, Quoth The Raven

I have been writing ad nauseum about how market structure has created market risk and has distorted price discovery.

We may be seeing those distortions now and in the immediate future in the shares of SpaceX ($SPCX) — something no in the business media is discussing.

From my friend, Quoth The Raven:

SpaceX Could Get Dangerously Systemic

Position: None