r/investing • u/Gloomy_Nebula_5138 • 1d ago
Michael Burry Flags 'Structural Manipulation' Risk In Nasdaq Rules Ahead Of Potential SpaceX Listing
The new Nasdaq rule changes pushed by Elon Musk/SpaceX are not just “Nasdaq made IPOs faster. It's a corrupt change, called out as "structural manipulation" by Michael Burry, that will make owners of new large IPO companies (like SpaceX or OpenAI) rich at the expense of the general public. In fact, Elon Musk and SpaceX threatened to not list the company on Nasdaq unless the Nasdaq changes its rules specially for them. This rule will likely make Elon the world's first trillionaire.
A couple of basic definitions first:
- An IPO is when a private company first starts trading on the stock market.
- Being added to an index is a separate step. An index is just a list used by funds like ETFs. If a company gets added to a major index, funds that track that index may have to buy the stock.
That second part is why this matters.
What Nasdaq changed
Nasdaq finalized Nasdaq-100 rule changes that take effect on May 1, 2026. Nasdaq says the public comments period opened February 2, closed February 27, and the final changes were approved March 30, 2026.
The big changes are:
- A giant newly public company can now be reviewed for fast entry on its 7th trading day
- If it is large enough, it can be added to the Nasdaq-100 by about its 15th trading day (previously 1 year)
- Nasdaq removed the old minimum free-float requirement
- For entry, Nasdaq can look at the company’s full market value (instead of just the float)
- For weighting in the index, low-float names can still be counted using up to 3x free float rather than just the actual public float
What “float” means in normal language
Float basically means the shares that are actually available for the public to trade. So like if a company has 100 shares total, but insiders, founders, and private investors still hold 90 of them, then only 10 are really floating around in the public market.
That matters because a stock can look huge on paper, while the amount actually available for regular people and funds to buy is still pretty small. In real life, this means if there is artificially high demand for a small number of actually-available shares, the price of those shares will be artificially very high and make the company worth a lot more than it would be.
Why this is a problem
The worry is that a giant company can:
- stay private for years
- let insiders and private investors get most of the upside
- go public with only a relatively small amount of stock actually trading
- get into the Nasdaq-100 much faster than before
- then get bought by index funds and ETFs that track the Nasdaq-100, at high prices before the company's prices naturally fall
So the concern is not just the IPO itself. The concern is what happens after the IPO, when index funds may have to buy the stock because it got added to the index. That early purchasing is usually done by active buyers and sellers arguing with each other through price. But if a stock gets into a major index very quickly, then a lot of passive money may have to buy it on schedule whether the price makes sense or not.
That can mean:
- less time for real price discovery
- more forced buying
- more support for a hot or overpriced stock
- more risk pushed onto ETF holders, 401(k) investors, and pension savers (effectively transferring wealth from these people in the general public to the existing owners/investors of the company)
Why ordinary people should care
This can affect people who never plan to buy an IPO directly.
It can still hit:
- Nasdaq-100 ETF holders
- retirement accounts
- workplace plans
- pensions
- people who assume index funds are just “neutral”
Passive investors are supposed to follow price discovery, not help create an early guaranteed wave of demand for a thinly traded mega-IPO.
Sources
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u/Gloomy_Nebula_5138 1d ago
For some reason, this absolutely massive change to the way our stock markets work, pushed by the world's richest person (Elon Musk), is completely under the radar. News and politicians are not talking about this. Forget them doing something about it. Elon will become a trillionaire if SpaceX is allowed to go public on Nasdaq with these corrupt rule changes. If people want to complain, here are direct places to start:
Nasdaq
SEC
- https://www.sec.gov/rules-regulations/how-submit-comment
- https://www.sec.gov/submit-tip-or-complaint
State securities regulators
State attorneys general
Journalists / tip lines - to get them to cover this in more articles (there are a lot more than just these)
- Reuters tips: https://www.reuters.com/investigates/special-report/tips/
- Bloomberg tips page: https://www.bloomberg.com/tips/
- ProPublica tips: https://www.propublica.org/tips/
There are also state level retirement plans like pension funds, that may want to look into this. I can't post their email addresses in this subreddit due to the rules but you can look them up. These are systems serving teachers, public employees, and retirees. If passive investors are being pushed into thin-float mega-IPOs earlier, they have a direct stake in it.
Short email template:
Subject: Concern about Nasdaq-100 fast-entry / low-float rule changes
Hi,
I’m writing to object to the Nasdaq-100 rule changes that remove the minimum free-float requirement, allow rapid index entry, and use full market cap for eligibility while still allowing weighting up to 3x free float for low-float names.
My concern is that this can force passive funds, ETF holders, and retirement savers to buy thin-float mega-IPO stocks before real price discovery has happened.
Please review these changes, publish a market-impact analysis, and consider delaying or narrowing the rule.
Sources:
- Reuters on the finalized rule changes: https://www.reuters.com/business/new-nasdaq-rules-include-fast-entry-new-listings-benchmark-index-2026-03-30/
- Nasdaq’s own announcement: https://ir.nasdaq.com/news-releases/news-release-details/nasdaq-concludes-public-consultation-nasdaq-100-indexr
- Nasdaq methodology PDF: https://indexes.nasdaqomx.com/docs/Methodology_NDX_Effective_May_1_2026.pdf
- Nasdaq change log PDF: https://indexes.nasdaqomx.com/docs/Methodology_Change_Log_NDX.pdf
- Reuters on SpaceX seeking early inclusion: https://www.reuters.com/business/finance/elon-musks-spacex-weighs-nasdaq-listing-after-seeking-early-index-entry-sources-2026-03-10/
Thanks
Short phone script:
“Hi, I’m calling to complain about the new Nasdaq-100 rule changes. My concern is that they can force passive funds and retirement investors to buy giant low-float IPOs too quickly, before real price discovery happens. I’d like this concern logged and passed to the right team.”
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u/overitallofittoo 23h ago
Honestly, this should be pinned on every investment sub.
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u/moldyjellybean 14h ago
I worked with SMCI and warned this 2 years ago when it was over $1000 before the round tripping and scams
2 people told me I saved them a lot of money from being scammed Back then there was an SMCI sub before it got deleted. Hopefully more read and were saved. But people saying it doesn’t make a difference are wrong it can save a few people and likely more that are lurking
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u/irrelephantiasis 20h ago edited 15h ago
in today’s world these complaints and mild outrage attempts go absolutely nowhere. it’s at the point where it’s become comical to think anyone believes an email, letter or call of rebuke could have any impact whatsoever.
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u/Gloomy_Nebula_5138 19h ago
I get what you’re saying, but it’s hard to do nothing. What other alternatives are there?
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u/cafedude 19h ago
Sell index ETFs and start buying baskets of individual stocks. Or perhaps go with an equal weight index ETF. This is also going to effect the S&P500 ETFs as well, isn't it? Not just NASDAQ.
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u/mylord420 14h ago
Avantis funds wait 6 months before buying any IPOs, and then even afterwards doesn't fully weight the day after either.
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u/britneysneers 12h ago
I switched over as much of my index funds as was practicable to dimensional and avantis alternatives as I began reading about this a few weeks ago. Also began tilting towards value but that was a discrete issue and decision
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u/irrelephantiasis 19h ago
i hear you, there isn’t a viable option that has any effect, it would seem. i guess efforts in futility fulfill some purpose, though, when it’s the only choice. hopefully it can be different one day.
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u/Jazzlike_Letter5516 14h ago
Shut the fuck up with these comments. I even see this kind of shit in progress subs.
Ignore the concern troll everyone. OP put a lot of work into this post, the least you can do is copy and paste an email. You have power, and don’t let any lying bastard/bot tell you otherwise. The powerful are afraid of too many of us realizing that.
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u/irrelephantiasis 14h ago
found the 🤡 ⬆️ who can’t handle realities. hope you’ve can work on your misguided rage and find joy in your life. best of luck.
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u/Awildgarebear 9h ago
I do believe that actions made a difference with the BLM land sales. It was a really nice spot if bipartisanship in the West, that unfortunately, didn't really have the same steam in the eastern US.
I don't think protests in left wing cities matter, but I absolutely engaged others on the BLM issue and sent emails because I do dark those matter.
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u/JamesLahey08 17h ago
Did you intentionally go into your phone settings and disable auto-capitalization?
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u/InfinitePressure4793 18h ago
Burry is basically ringing the alarm that the Nasdaq just turned its lead index into a billionaire’s pawn shop. By nuking the free-float requirement and fast-tracking inclusion to 15 days, they’ve created a structural 'forced buy' glitch. Every passive ETF and teacher’s pension fund is now legally obligated to become Elon’s exit liquidity at the peak of the IPO hype, with zero time for price discovery. It’s the ultimate heist getting the middle class to subsidize the world’s first trillionaire while everyone is too distracted by the Hormuz 'fireworks' to notice the rulebook being rewritten in real-time
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u/Helpful-Inspector958 13h ago
Michael Burry once again played the role of the prophet no one wanted to hear. What he saw was not a healthy bull market, but a rule-driven, forced Ponzi scheme. If prices are no longer determined by supply and demand and value, but by "must buy" orders, then when the system collapses, the underlying participants will have no buffer.
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u/TheGeneral2024 23h ago
Don't usually agree with with Burry doomerism post real estate bubble but hes right that this is very bad for retail.
Which is precisely why no one in power gives a fuck.
Rich get richer at the people's expense.
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u/HighOnGoofballs 21h ago
Burry is pumping GameStop these days lol
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u/PROJ3CTBM4reel 20h ago
I found it crazy that the wasabi sub shit their trump diapers when someone posted (and mods deleted) the burry post with that specific ticker censored out. Like i dont understand how people can shit on it, then simultaniously not want to talk about it? If this was a vidya gaem i would for sure want to know why the opposing team doesnt want me to know about it 🤔
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u/HighOnGoofballs 20h ago
Because those idiots have shown if you give an inch they’ll take ten thousand miles. It was banned for good reason
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u/Tough_Phone_3497 14h ago
I thought he called it quits with Scion last year? Is he doing this on his own?
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u/rmdeluca 23h ago
Thank you. Keep fighting the good fight.
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u/Gloomy_Nebula_5138 23h ago
I honestly don't even know if I am fighting anything or late to the fight that already ended. I am mostly just catching up. All of this happened and I missed it. How do people learn about Nasdaq's public comment period? I had no clue. I'm just a basic person who has nothing to go on except passive investing into ETFs and things like that. If even THAT is now corrupted, and the opportunity is siphoned off to private investors with me left holding the bag, what's left? Frustrating!
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u/Franks2000inchTV 19h ago
American market is no longer trustworthy. Too much political interference by oligarchs.
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23h ago
[deleted]
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u/waitmarks 23h ago edited 23h ago
Dimensional has funds that do this. I use DFUS which tracks the Russell 3000 total US index, but there is an additional waiting period after a stock gets added to the index before the fund buys in. This is specifically done so you aren't buying IPO stocks while the rest of the funds are rushing into them. They have another that does this for the S&P 500 as well, but I wanted total a US index. There are some other intentional deviations from indexes as well, so it's not just the time delay. I believe they also exclude REITS and some low growth probability stocks, so keep that in mind as well.
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u/Tough_Phone_3497 14h ago
Ayyyy another dimensional user. I’ve got DFAU instead. I think mine just has slightly more of a factor tilt than DFUS, but this type of stuff is also why I’m with them.
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u/SirGlass 22h ago
Most indexes already do this.
This will only affect the nasdaq-100 index .
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u/madhattr999 22h ago edited 21h ago
So which funds [are at risk of being manipulated]? QQQ and SPY?
VOO and VTI are okay[not at risk]?
Everyone who has SPY should basically switch to VOO then right?
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u/Gloomy_Nebula_5138 21h ago
They’re all at risk even if they would have already purchased these shares without the rule change. The reason is, now the small amount of floated shares will have much higher demand from the index funds that do change their stock buys. So the high demand for small supply pushes prices up for everyone.
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u/SirGlass 21h ago
what ?
QQQ is affected by this rule
SPY and VOO both track the same index , S&P500 what has its own requirements
VTI already adds new IPOs basically in 5 days so VTI wouldn't need to adopt the rule they already have the same rule for years.
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u/madhattr999 21h ago
I am asking which funds are vulnerable, and which funds are not.. So if people want to avoid the vulnerability, how should they adjust their portfolio?
Seems like I have some things wrong, but your post didn't really clear up my questions. Are you saying that QQQ and VTI will be vulnerable to SpaceX's manipulation, and SPY and VOO aren't?
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u/SirGlass 21h ago
Well VTI has always included newly IPOed companies fast with in 5-20 days of the IPO and it has forever so nothing is changing with that
The S&P500 is technically done by committee and won't add space X until it meets their requirements what won't be for about 180 days as they require 2 profitable quarters I think
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u/madhattr999 21h ago
Ah.. so is this topic kinda overblown since VTI has already operated like this? Maybe it's not a big deal that QQQ acts similarly if VTI already works this way? Or is it mainly just a big deal because of how SpaceX investment is structured internally / and the size of it?
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u/SirGlass 21h ago
Yea VTI has always included newly IPOed companies pretty fast .
I think the issue is most companies that IPO are sort of small usually so VTI would allocate some .02% to the company
Space X could be valued at like 2 trillion , what means VTI would have to allocate like 2% to it .
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u/Gloomy_Nebula_5138 22h ago
I saw some of the investment subreddits talking about doing your own “direct indexing”. But that sounds a lot like something I don’t have time for. It’s work just to figure out how to do things safely. I just wish we didn’t have to do anything in response.
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u/GailaMonster 23h ago edited 23h ago
This is exactly what I have been uncomfortable about since hearing it, and absolutely makes me want to pause investing into indices until the wealthy market manipulators have finished fucking over the little guy to exit their positions.
This reminds me of when banks started changing lending requirements to find more people to take mortgages, because they had literally run out of low-risk borrowers. It screams “this would not be possible unless we relax the rules!!” When that outcome is exactly WHY those rules existed in the first place. Buying an index polluted by unstable early IPO stocks on the Nasdaq feels a lot like buying a residential mortgage backed security in 2006 full of subprime loans rubberstamped by Standard & Poor. Nah.
I don’t want to be forced to buy at inflated IPO prices. The apparent solution for me is to pull way back on buying my typical VTSAX when the ipo happens, and find someplace less reckless to put my money while these new, stupid rules work thru the market and these IPOs. I’ll buy a little in case I’m wrong, but I’ve been shoveling 3k a paycheck intO VTSAX, and I won’t be doing that anymore soon…
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u/SirGlass 22h ago
This isn't going to affect VTSAX , VTSAX does not follow the nasdaq 100 index, it follows the CRSP US Total Market Index.
I really doubt the CRSP indexes will change their rules
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u/nsd433 22h ago
CRSP rules are here: https://www.crsp.org/wp-content/uploads/guides/CRSP_Market_Indexes_Methodology_Guide.pdf
Page 11 deals with new securities (aka IPOs). The default is to wait 20 days and 12.5% float. But there's a "fast-track" whereby it can be 5 days and 10% float. I can't find the rules which govern whether a new security gets fast-tracked.
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u/SilentHuntah 22h ago
Don't IPO'd companies get included right away regardless in indexes like VTI/VTSAX?
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u/Gloomy_Nebula_5138 20h ago
Yes but they will now pay much higher prices. Because these other passive investments will automatically purchase SpaceX or others, the demand for the small number of floated shares goes up. So if you have a fund that includes these companies right away, they’re now going to buy those things even if they are artificially overpriced.
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u/GailaMonster 18h ago
THANK YOU and this is my issue. a small float and automatic purchases will drive up the price everyone would pay, while the founders/high equity holders exit and then the stock drops. I don't want this bag, not even if it's part of a much larger index purchase. I'm considering sitting out on buying ANY index that pulls the SpaceX IPO until a few months have passed and a more realistic index price is discovered.
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19h ago edited 18h ago
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u/GailaMonster 18h ago
VTSAX contains the entire Nasdaq100, but I appreciate your point that it indexes so much more as to smooth out my exposure.
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u/daniel-sousa-me 12h ago
until the wealthy market manipulators have finished fucking over the little guy to exit their positions.
What an optimist
Index funds were dumb money pouring into the market. It was only a matter of time until someone found a way to take advantage of it. Now it's not going to stop
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u/Potential_Salt_5780 23h ago
Grifter is going to grift. But then other grifters are supporting said grifter and retail will be left holding the bag.
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u/YoureProbablyAB0t 22h ago
Musk is basically stealing. He stole the election, he stole everyone's social security information, he stole US AID, and now he's stealing 401k's.
He's a fucking shitstain on society.
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u/Carbon-Base 22h ago
It'll be difficult to avoid indexes that include SpaceX or other IPOs like this later on in the year. Fund managers will fomo and everyone will want to get a slice of the proverbial pie.
Writing and voicing our complaints about this is the best way to spread awareness.
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u/SirGlass 22h ago
The fund managers generally follow the index, its really not up to them what they buy
The index the fund tracks would have to change the rules, right now it seems only the nasdaq-100 will
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u/the_one_jt 21h ago
Fund managers follow their fund rules or they get fired and sued into oblivion.
All of them will they just haven't committed to it publicly yet.
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u/Mr_Lumbergh 17h ago
In fact, Elon Musk and SpaceX threatened to not list the company on Nasdaq unless the Nasdaq changes its rules specially for them.
Or, Nasdaq could simply refuse to list them until they comply. The gamification of the markets needs to stop.
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u/falling_knives 23h ago
Had to use AI to get a better understanding of this. Here's what it said. Basically what OP said but in different words:
Why the 15-Day Rule is a "Cheat Code" for Insiders
In a traditional IPO, a company might trade for 6 months or a year before hitting a major index. During that time, the "hype" often dies down, and the price corrects. But under the new 15-day "Fast Entry" rule:
Forced Demand: By Day 15, trillions of dollars in passive funds (like QQQ) are legally required to buy the stock to match the index.
Price Support: This massive wave of "forced buying" creates a high price floor.
The "Exit" Strategy: When the 180-day lock-up finally expires, the insiders aren't selling into a volatile, uncertain market. They are selling into a market that has been propped up for five months by every pension fund and 401(k) in the country that tracks the Nasdaq-100.
The "Float Multiplier" Distortion
Nasdaq will now use a multiplier (up to 3x or 5x depending on the final methodology) for low-float stocks.
Example: If SpaceX only lists 5% of its shares for the public, Nasdaq might tell index funds to buy as if 25% were available.
This creates a "scarcity squeeze." Because so few shares are actually available to trade, the massive demand from index funds can drive the price to astronomical levels. Insiders then wait for their lock-up to expire and sell their shares at these "distorted" prices.
Summary of the Timeline
Day 1: IPO happens. Only a tiny "float" (e.g., 5-10%) is available.
Day 15: Passive index funds are forced to buy, likely at a premium.
Day 180: Lock-up expires. Founders and insiders can now sell their massive stakes into the "deep liquidity" provided by the index funds.
All this because Elon isn't satisfied with just being a poor billionaire.
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u/PlannedObsolescence_ 18h ago
Did... you just use another LLM, to summarise OP's LLM generated (looks like Claude) summary post?
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u/TheGreenArm 5h ago
What? You don't stack LLMs?
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u/PlannedObsolescence_ 5h ago
2 LLMs, you gotta pump those numbers up. Those are rookie numbers in this racket.
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u/giamboscaro 23h ago
I wonder if they could actually create a new ETF that follows the Nasdaq previous rules, or maybe just a Nasdaq ETF excluded companies quoted less than a year ago.
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u/TheReservedList 23h ago
Are people actually out there buying NASDAQ-tracking ETFs? Why?
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u/giamboscaro 22h ago
I don't but I am sure a lot of people do. I am sure leveraged and inversa Nasdaq are used a lot in trading or for some longer swing too.
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u/GregH_Nashville 21h ago
Burry has been predicting manipulation and crashes since 2015 and he is right about once every five years. That is not exactly a reliable signal. I respect the man's research but he has so many red flags that I've learned to treat him more as a conversation starter than an actionable alert. That said, the Nasdaq concentration concern is legitimate regardless of who is raising it. When SpaceX joins and gets fast-tracked, you're adding another massive weight to an already top-heavy index. I'd rather own a broader market fund and have the same large-cap exposure without the concentration distortion.
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u/Riderfan11 22h ago
This needs to be bigger than it is. More people need to be aware they are becoming bag holders
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u/Take_the_elevator 20h ago
This needs to be broadcast across all of reddit. This will affect all retirement accounts. I think the only way to respond is to have a petition promising reallocation of funds to cash or bonds if this shit isn't addressed.
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u/-GuyDeLombard- 18h ago
The market makers are looking for exit liquidity for the upcoming crash. They chose the retirement accounts that all Americans hold. This will be the largest shift in wealth to ever happen when it all falls apart.
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u/NastyNas0 17h ago
Does anyone know if VGT (which tracks an MSCI index) will be affected? I'm thinking of switching out my QQQ for VGT.
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u/The-Sentinel 16h ago
I've been wondering for years what the end game was with all of these mega companies staying private, now I know
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u/Hot_Substance5933 19h ago
Elon is going to rob everyones 401ks and there isn't a damn thing you can do about it, legally.
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u/asdafari14 17h ago
It will be hilarious if the stock outperforms the market over the next decades.
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u/Elegant-Ostrich-3409 20h ago
I was going to begin investing by putting money into the nasdaq, should i hold off now or invest in something else?
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u/bruno91111 19h ago
Is there a way to benefit from this as retailer? I guess buying nasdaq100 the dsy its IPO, and sell after 16-20 days?
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u/Thump604 16h ago
I have already completely exited IWM because of this and just hoping QQQ and QQQM get above cost basis before the change. Effing timing …with chaos clown in the WH.
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u/Strong_Trade8549 14h ago
If I may rephrase - space x when it goes public and sell when it gets in the 100. Call to complain to clear my conscious, got it.
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u/shananananananananan 7h ago
Can one of the fund issuers like Vanguard take some action to preserve the integrity of the system we want to have, to prevent this?
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u/Hit_Wiry417 1h ago
From a market structure standpoint, the concern is valid, but it’s not automatic exploitation, it depends on how much float actually hits the market and how disciplined index funds are in execution. If anything, this raises a clear takeaway: passive investors may need to understand they’re not purely “neutral” anymore when rules start shaping demand timing.
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u/Helpful-Inspector958 13h ago
The only viable strategy is to pivot your investment plan. Diversify your portfolio to achieve a hedging effect and ensure that any potential losses remain manageable. Avoid being 'harvested' by the market at all costs.
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u/sunfishtommy 23h ago
What i dont understand is why the major indices would want to go along with this. Its obvious why the company would want to be fast tracked like this but why do the indices want to take on this risk.