Index Funds Under Pressure as SpaceX Joins Nasdaq-100

The recent inclusion of SpaceX in the Nasdaq-100 has raised questions about the safety of index funds, which are designed to track the market as a whole. Index funds are popular among investors due to their low costs and diversified portfolios, but the addition of a highly volatile stock like SpaceX could potentially disrupt this stability.

The past prices of a stock don't predict the future, and because it is hard to predict the future, it is very difficult to beat the overall market returns over a long period of time.

Burton Malkiel, a pioneer in the development of index funds, believes that SpaceX's inclusion is not a reason to avoid index funds altogether. According to Malkiel, the 'random walk' of stock prices means that it's difficult to predict which stocks will perform well in the future. As a result, most investors are better off investing in the overall market rather than trying to pick individual winners.

The addition of SpaceX to the Nasdaq-100 has also led to some interesting market dynamics. The stock's inclusion in the index meant that index funds had to buy in, which could have led to some market manipulation by banks and hedge funds.