The Biggest IPOs in History Are Here - Should Optometrists Invest?

Questions? Thoughts? Send a Text to The Optometry Money Podcast! We'll answer your question on the show. (https://www.buzzsprout.com/1970676/fa...) Episode Summary The largest IPO in history is here. SpaceX goes public this week with an expected total value of $1.77 trillion, and OpenAI and Anthropic have both announced plans to go public this year at valuations around $1 trillion each. In optometry forums and online communities everywhere, ODs are asking the same question: should I get in? In this episode, we look at 45 years of data and research on how IPOs have actually performed for investors - and then dig into the question that matters more for most listeners: how index funds and other passive funds will add these mega IPOs to their portfolios, and what that means for you. Have questions about your own investment approach? Reach out at [email protected] (mailto:[email protected]) . What You'll Learn • What an IPO is and why 2026's IPOs are historic in size • How IPOs have historically performed compared to the broad US stock market • Why the famous "first-day pop" doesn't benefit everyday investors • The distribution of individual IPO outcomes over 3 and 5 years — and why most lose money • Why periods of peak IPO hype tend to be followed by the worst returns • How the S&P 500, Russell, CRSP, and MSCI indexes decide when (and how much of) an IPO to include • What "float adjustment" means and why these trillion-dollar companies will enter index funds as tiny slivers • How the Nasdaq-100's approach to IPOs differs from broad market indexes • Whether index fund "front-running" around IPO inclusions should worry long-term investors • How factor-based funds like Dimensional handle newly public companies Key Takeaways for Optometrists Investing in IPOs right after they go public has historically been a poor strategy. IPOs as a group have trailed the broad market, and when you look at individual companies, roughly 60% lost money over their first three to five years - while a small sliver delivered lottery-like gains that lift the averages. Betting on IPOs means betting you can pick those rare winners. For index fund investors, these mega IPOs will eventually show up in your funds - but because indexes are float-adjusted, even a $1.77 trillion company may enter as a fraction of a percent of the index. The impact on your portfolio, good or bad, is small. The bigger lesson: when hype is at its highest, expected returns tend to be at their lowest. Staying broadly diversified, keeping costs low, and not chasing shiny objects continues to be the prudent approach - and if you do want a lottery ticket, be honest about what it is and size it accordingly. Related Episodes: • Ep 134: The Case for Index Funds – Why Optometrists Should Embrace Passive Investing (https://optometrywealth.short.gy/ODmo...) • Ep 135: Beyond Indexing – An Optometrist’s Guide to Factor-Based Investing (https://optometrywealth.short.gy/ODmo...) • Ep 58: Investing Fundamentals – Understanding Stocks, Bonds, Mutual Funds, and ETFs (https://optometrywealth.short.gy/ODmo...) • Ep 153: How to Invest Tax-Efficiently and Keep More of Your Returns (After-tax) (https://optometrywealth.short.gy/ODmo...) Resources for Optometrists • Loughran & Ritter (1995), "The New Issues Puzzle" — Journal of Finance (https://site.warrington.ufl.edu/ritte...) • Dimensional Fund Advisors (2019), "What to Know About IPOs" research study (https://www.dimensional.com/us-en/ins...) • Dimensional Fund Advisors 2025 video: Do IPOs Have a Place in Your Portfolio? (https://www.dimensional.com/us-en/ins...) • Jay Ritter's Long-Run Returns on IPOs (University of Florida) (https://site.warrington.ufl.edu/ritte...) • 2025: Primary Capital Market Transactions and Index Funds (https://papers.ssrn.com/sol3/papers.c...) • Cullen Roche's Article: Three Things – 100s, SpaceX, & Indexing (https://ria.disciplinefunds.com/2026/...) • Morningstar's Jeff Ptak: Lessons From a Private Markets Bust: Why This ETF’s Investors Missed Out on SpaceX Gains (https://www.morningstar.com/alternati...) Want a more proactive approach to your planning? You can schedule a no-commitment introductory call to discuss what's on your mind financially and learn how we help optometrists navigate those same decisions nationwide. 👉 Schedule an introductory call (https://optometrywealth.short.gy/contact) The Optometry Money Podcast is dedicated to helping optometrists make better decisions around their money, careers, and practices. The show is hosted by Evon Mendrin, C...