Should You Chase the SpaceX or Anthropic IPO? Why Index Funds Are the Smarter Play

The Biggest IPOs Are Coming — Should You Jump In?

The short answer: no. IPOs statistically underperform the broader market. The hype inflates prices well above intrinsic value. If these companies deliver even half of what's expected, they'll eventually join major indexes — and your index funds will capture that growth without the IPO risk.

SpaceX. Anthropic. The investment world can't stop talking about these upcoming IPOs. The narrative is always the same — "this one is different," "it'll never come down," "you'll regret missing it."

I'm not participating in any of them.

Why IPOs Are a Losing Bet

The data is clear. IPOs consistently underperform the broader market over time. Excessive media coverage and investor excitement push prices well above reasonable valuations at launch.

Could SpaceX soar from day one and never look back? Sure, it's possible. But the IPO price will almost certainly be inflated by years of private-market hype. All that excitement, all those headlines — they're already priced in. At that point, you're not investing. You're speculating.

The Power of the Three-Fund Portfolio

This is exactly where the three to four fund portfolio strategy proves its worth.

If SpaceX delivers on its promise, it will eventually be added to the S&P 500. To the NASDAQ 100. To total US stock market indexes. If you hold funds like QQQM, SCHG, or VTI, you'll gain SpaceX exposure automatically — without paying an inflated IPO price.

The same logic applies to Anthropic or any other mega IPO. If these companies achieve even half of their projected potential, they'll be indexed. Your portfolio captures the upside with none of the IPO timing risk.

This is the elegance of index investing. Growing companies find their way into your portfolio naturally. No stock-picking anxiety. No timing pressure. No FOMO.

The Same Logic Applies to Quantum Computing

Watching quantum stocks surge 50% this week might trigger the impulse to jump in. The same principle applies.

If quantum computing companies continue to grow, they'll eventually be included in growth ETFs like QQQM or SCHG. You don't need to chase the top of a momentum spike to participate in the long-term trend.

If you have genuine conviction in quantum computing and accept the risk, waiting for a pullback to enter a small position is reasonable. Buying at the peak of a FOMO-driven rally is not.

The Practical Playbook

The smartest course of action right now is straightforward:

1. Maintain your core index fund portfolio and continue regular contributions through dollar-cost averaging
2. Ignore IPO hype — the statistics are on your side
3. Research sectors that interest you (quantum, AI, etc.) but wait for corrections before entering
4. Monitor the bond market — rising yields are creating increasing headwinds for growth stocks

FAQ

Q: What if SpaceX is the exception to the IPO rule? A: It might be. SpaceX is an extraordinary company. But even extraordinary companies can be overpriced at IPO. If SpaceX truly becomes as dominant as expected, it will join the S&P 500 and NASDAQ 100, giving index fund holders automatic exposure. The question isn't whether SpaceX will succeed — it's whether paying an inflated IPO price gives you a better risk-adjusted return than simply waiting.

Q: What exactly is the three-fund portfolio? A: It typically consists of a US total stock market index fund (like VTI), an international stock index fund (like VXUS), and a bond index fund (like BND). This gives you diversified exposure to thousands of companies worldwide. As companies grow and prove their value, they naturally get added to these indexes — meaning your portfolio automatically captures winners without you needing to pick individual stocks.