The recent IPO of SpaceX has rewritten the record books, becoming the largest public offering in history. Not surprisingly, it has generated tremendous media attention and sparked questions from investors.
 

The question I have heard most often is: "How will this affect my accounts and the S&P 500?" For most investors, the answer is not immediately. Nearly every diversified portfolio has some exposure to the S&P 500 unless it is invested primarily in fixed income or a very conservative allocation. However, even a company as large as SpaceX doesn't automatically become part of the index after going public.
 

According to information provided by American Funds, a newly public company must meet several requirements before it can be considered for inclusion in the S&P 500:

• The company must generally be publicly traded for at least 12 months.

• It must report positive earnings over 4 consecutive quarters.

• The S&P Index Committee must approve its inclusion.

 

Artificial intelligence, aerospace, and other innovative industries will likely continue to create attractive long-term investment opportunities. However, successful investing has never been about chasing the latest headline. It has always been about maintaining a diversified portfolio that  balances opportunity with risk.