Index funds are a popular choice for safe, long-term investment. But what happens when SpaceX, often seen as a risky bet, joins the Nasdaq-100? Burton Malkiel, who helped popularise index funds, explains their reliability is more about market rules than individual stocks.

The Nasdaq-100 change allows SpaceX to join after just 15 days of trading. This means index funds had to buy in, potentially driving up the stock price. Research suggests this buying could have contributed to SpaceX’s initial IPO surge. Other tech giants like Anthropic and OpenAI are expected to follow suit.

While SpaceX’s inclusion won’t destabilise index funds entirely due to its market cap size, there are concerns about short-term volatility. As employees’ lockup periods expire, more shares could hit the market, affecting prices. However, index funds might help stabilise these fluctuations.

The real issue lies with Musk’s governance. CalPERS and New York state officials have raised concerns over his control, which can lead to unpredictable share price swings. Despite this, SpaceX remains a significant player in these funds due to its sheer size, even though it only sold 5% of shares in the IPO.

The article concludes that while SpaceX might not be a perfect fit for index funds, its inclusion is more about market mechanics than individual stock performance. It’s all part of Wall Street's fascinating dance with unpredictability.