If whole market means whole market, then such investments are exposed to companies who are fairly valued, companies who are massively overvalued, and companies who are massively undervalued, and the whole range in between.

If you want to start picking and choosing which companies are overvalued and which are undervalued, don’t invest in whole market funds. But most people are not good at that!

So your contention is what? This will crash? Surely you'll be shorting the stock right?

The key there is "whole market." This is still a tiny sliver of the whole market and most people's exposure to it is minimal. Still a wealth extraction move ultimately, but like many other such moves, the few pull just a little from each of the many. Nobody individually goes broke, but the whole class gets slightly poorer. It takes a village to raise a billionaire!

If you want to play “active investor” and pick and choose what companies you invest in, don’t be surprised when you underperform the whole market.

SpaceX could rise to be a major winner that makes people a lot of money. And then what? You missed out and underperform the whole market.