By Elizabeth O'Brien

Feeling FOMO about SpaceX stock? I'm not, but I know it's only a matter of time before it shows up in my retirement portfolio anyway.

SpaceX has had a meteoric rise, soaring nearly 50% since its initial public offering on June 12, the largest IPO in stock market history. In a few months, OpenAI and Anthropic are expected to follow with their own IPOs, putting shares of two more megacap AI stocks in public hands.

It's understandable if you fear missing out. It's also understandable if you'd rather not jump onto the SpaceX rocket, whether it's due to concerns about overexposure to tech, the stock's steep price, or aversion to CEO Elon Musk, the newly minted trillionaire (on paper).

Either way, SpaceX stock may soon make its way into your portfolio. By early July, the stock will be included exchange-traded funds like Invesco QQQ Trust, which tracks the Nasdaq 100. Inclusion in the S&P 500 and related index funds will follow in at least 12 months.

For now, SpaceX won't have an outsize sway on market indexes. While the company has a total market value of $2.8 trillion, only $75 billion worth of shares were issued. Even with the stock rising sharply, its "float adjusted" market cap is around $109 billion -- a minnow compared with giants such as Nvidia, worth nearly $5 trillion in publicly available stock.

SpaceX's share count will rise, however, as the "lockup" period for early investors winds down. That, in turn, may increase its weighting in indexes like the Nasdaq 100 and eventually the S&P 500. If the stock keeps rising, so will its impact on index funds.

The bigger question is whether SpaceX and other AI-related stocks have runway to keep rising; or, conversely, whether they're grossly overvalued, pushing the market dangerously into bubble territory.

Rather than venturing predictions, it makes sense to look at it through your personal financial lens and stage in life.

If you're young, it doesn't really matter which side is right. You have 30 years or more to weather a tech bust before you may need to start tapping your retirement portfolio. That leaves plenty of time for the stock market to recover and crank out historical returns, averaging about 10% a year.

But if you're nearing or in retirement, it's important to protect your portfolio against one of the biggest risks: that you encounter a bear market early in retirement, which will deplete your nest egg much faster than a bull or even flat market.

The math can be stark. An investor who starts retirement with $1 million, for instance, and experiences 15% losses in the first two years will run out of money after 18 years. That assumes annual withdrawals of $50,000 indexed for inflation and 6% market returns in years three to 18, according to an illustration from Charles Schwab. By contrast, an investor with the same $1 million who experiences the negative 15% returns in years 10 and 11 and earns 6% in all the other years would have $400,000 left after 18 years.

"Can you imagine hitting that at the wrong time, because of your age, and having that define how you'll live for the rest of your life?" says Vincent Randazzo, portfolio manager at Tamarisk Capital Management.

One way to guard against "sequence of returns" risk is to keep up to two-years' worth of portfolio withdrawals in cash, so you won't be forced to liquidate shares in a declining market. To further insulate your portfolio, consider cutting your stock exposure to 30% as you move into retirement, then gradually raise it to 60% by year 30, a glide path recommended by many advisors.

True diversification matters, too. If all your equity allocation is in the S&P 500, you have huge tech exposure. Consider branching out internationally, adding small- and mid-cap stocks, and tilting more to value since the S&P 500 is now so growth-oriented.

For international diversification, consider iShares MSCI ACWI ex U.S., an ETF that's broadly diversified across Europe, Asia, and other markets. Invesco S&P 500 Equal Weight avoids the heavy concentration in the cap-weighted version of the index, providing more exposure to small- and mid-cap stocks. For value, consider iShares S&P 500 Value, which has 20% in tech, on the lower end for value funds.

Recent research suggests that concentration risk isn't as bad as feared. But it entails more volatility, and that's something that most retirees would rather avoid. I'm not on the cusp of retirement, but I'm also no AI enthusiast, so I'm going to sit out this hot IPO summer.

Write to Elizabeth O'Brien at elizabeth.obrien@barrons.com

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June 19, 2026 21:31 ET (01:31 GMT)

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