With SpaceX just a couple days away from its IPO, every 401(k) saver needs to pay attention...
If you have money in a 401(k), there's a good chance you're invested in an S&P 500 Index fund or target-date fund.
You may be operating under the assumption that your wealth is safely diversified across 500 distinct American corporations.
However, the S&P 500 is a market-capitalization-weighted index. The larger a company grows, the more heavily it's weighted in the index... and the more of your retirement dollars automatically flow into it.
Today, the top 10 stocks in the S&P 500 make up roughly 40% of the index. That means for every $1 you put into your 401(k), $0.40 goes to just 10 names.
That's not diversification.
And the index will become even more concentrated with SpaceX going public later this week...
SpaceX plans to market its IPO at $135 per share with the ticker symbol SPCX. It's estimated that the company will have a valuation of nearly $1.8 trillion. That would make SpaceX the seventh-biggest company in the S&P 500 – just ahead of Tesla (TSLA).
While the company brought in $18.7 billion in revenue in 2025, it had a net loss of $4.3 billion in the first quarter of 2026. It's currently burning billions of dollars to build out deep-space infrastructure and interconnected servers.
In short, SpaceX is far from being profitable. Yet 401(k) savers will be forced to own it.
Now, to be clear, SpaceX won't join a major index like the S&P 500 on day one. There are specific criteria the company must meet, like posting four consecutive quarters of profitability. But since this is a massive IPO, SpaceX could be fast-tracked for index inclusion. (Note that the S&P Dow Jones Indices said it wouldn't change the requirements for entry into its major indexes... at least for now.)
Eventually, though, 401(k) participants are going to own SpaceX whether they like the company or not.
And every time an accountant, dentist, or factory worker auto-contributes to their 401(k), an outsized chunk of their capital will be funneled directly into the top 10 stocks, including SpaceX, leaving the bottom 490 companies with crumbs.
In other words, you're no longer buying an index of the American economy with your 401(k)... You're buying a concentrated bet on a few tech giants.
And to make matters worse, SpaceX is entering the public market priced to absolute perfection. Its lofty valuation relies heavily on long-dated narratives regarding global telecom dominance, orbital cloud computing, and Mars colonization.
That sounds great and all. But again, the company is burning through a massive amount of cash.
With this in mind, 401(k) retirement savers need to be careful about blindly throwing their money into index funds.
If you're relying entirely on standard capitalization-weighted funds for your nest egg, a future SpaceX inclusion means your retirement security will be increasingly tied to the volatile, capital-intensive trajectory of a few richly valued mega-caps.
I sure wouldn't want to have a large portion of my nest egg wrapped up in SpaceX after it goes public. The valuation is simply too rich, and there's too much risk of the company not living up to the hype.
While owning the S&P 500 is the best proven way to grow your wealth long term, there are times when you need to be cautious. Today is one of those times.
Since the index is heavily weighted toward Big Tech, the S&P 500 is trading near its most expensive valuation in history...
My suggestion would be to diversify...
Have a portion of your 401(k) contributing to an equal-weighted S&P 500 fund. Own some gold as a "chaos hedge." And consider even putting some of your money into international funds.
For the average retirement saver, the traditional "set it and forget it" index fund model is losing its historical safety advantage. So make sure to pay attention to what you actually own in your 401(k).
And if you want exposure to a space company that's not overhyped and overvalued like SpaceX, my friend and colleague Dave Lashmet has uncovered a far better way to play the trend.
It all has to do with a technology roughly 10 times more powerful than anything SpaceX CEO Elon Musk has built. This is a technology the Department of Defense has been funding for years. And according to Dave, it could reshape the future of space-based communication and create enormous 1,000% gains for early investors.
He says a catalyst that virtually no one on Wall Street has spotted – involving this technology – is coming on June 15. And he believes it could send a small list of stocks soaring within days.
Check out Dave's presentation before it goes offline. Click here to learn more.
What We're Reading...
- Musk's SpaceX won't get a fast track to the S&P 500 as index provider keeps rules unchanged.
- Something different: NBA Finals ticket prices skyrocket and Knicks fans face dilemma: Sell or keep?
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
June 10, 2026