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SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

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Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#21

Post by JumpCrisscross »

BoiledCabbage wrote: post #14
JumpCrisscross wrote: post #8

Earlier quoted context omitted.

> What was the common misconception? That the rule change was a done deal. The pitch was some shadowy financial cabal forcing everyone’s retirement savings into SpaceX (which would not have been true even if S&P voted to include, but that’s a separate topic). The top comment and most of its subthreads are run-of-the-mill alarmism.

>> What was the common misconception? > That the rule change was a done deal. What are you talking about? The rule has already been changed in the NASDAQ. That makes it a done deal. Anything changed can always be undone, but to be clear it has already happened. That makes it a done deal.

The S&P change was taken as a done deal. Search that page for S&P. The indices that flipped are less relevant than many individual active managers.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#22

Post by karp773 »

JumpCrisscross wrote: post #3

The amount of misinformation around this topic was absolutely nuts over the past few days. Good rule of thumb: if a YouTuber or other influencer was pitching doom and relaying this rule change by S&P as a fait accompli , stop following them. (It was a common misconception on this thread: https://news.ycombinator.com/item?id=48364055 .)

What's the urgency to bend the rules? It is not like SpaceX is banned for good. It will be included as soon as it meets the requirements.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#23

Post by JumpCrisscross »

stubish wrote: post #9

This seems a sensible thing to do. If you change the rules on how things end up on your index, you force everyone using that index to reevaluate it. Your index is now perceived as more volatile (and probably is), and all the finance people need to reevaluate the risk of their index funds and decide if it is now 'growth', 'high growth' or whatever bucket it belongs in based on the new risk profile. And then all the po…

> sensible thing to do is to create a new index with the new rules

It depends. Indices aren’t funds. They aren’t meant to balance investor interests. They’re meant to communicate some metric about the market.

The S&P tells you how big companies are doing in an index optimized to balance representation against trading cost. So in 2005, float was taken into account for weighting (versus just market cap). This made sense. Also, since the start, the S&P 500 has been a committee-based index. Not rule based. This has made it successful; if you want stable and unchanging, you never went for the S&P 500.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#25

Post by JumpCrisscross »

karp773 wrote: post #22
JumpCrisscross wrote: post #3

The amount of misinformation around this topic was absolutely nuts over the past few days. Good rule of thumb: if a YouTuber or other influencer was pitching doom and relaying this rule change by S&P as a fait accompli , stop following them. (It was a common misconception on this thread: https://news.ycombinator.com/item?id=48364055 .)

What's the urgency to bend the rules? It is not like SpaceX is banned for good. It will be included as soon as it meets the requirements.

> What's the urgency to bend the rules?

If you’re buying into a tech-marketed fund like the NASDAQ 100 and it doesn’t include a large chunk of the tech market, you’re no longer passively investing in tech. You’re investing in an actively-managed fund.

Historically, companies like SpaceX would have gone public earlier and grown into the index. Recognizing that has changed with multiple $1+ trillion IPO contenders makes sense; as it turns out, I think both NASDAQ and S&P decided correctly.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#26

Post by nothercastle »

aeternum wrote: post #4
JumpCrisscross wrote: post #3

The amount of misinformation around this topic was absolutely nuts over the past few days. Good rule of thumb: if a YouTuber or other influencer was pitching doom and relaying this rule change by S&P as a fait accompli , stop following them. (It was a common misconception on this thread: https://news.ycombinator.com/item?id=48364055 .)

Yes, I think given that misinfo this was probably the right decision by S&P, everyone would be saying I told you so and screaming about providing exit liquidity. My prediction is that this will overall end up costing index holders money though. They will ultimately get a worse entry price for SpaceX and the other mega IPOs. Only time will tell.

They might but changing the rules for a highly controversial company would do more harm in lost trusts than gain for investors.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#27

Post by harshalizee »

JumpCrisscross wrote: post #25
karp773 wrote: post #22

Earlier quoted context omitted.

What's the urgency to bend the rules? It is not like SpaceX is banned for good. It will be included as soon as it meets the requirements.

> What's the urgency to bend the rules? If you’re buying into a tech-marketed fund like the NASDAQ 100 and it doesn’t include a large chunk of the tech market, you’re no longer passively investing in tech. You’re investing in an actively-managed fund. Historically, companies like SpaceX would have gone public earlier and grown into the index. Recognizing that has changed with multiple $1+ trillion IPO contenders make…

Not really. The underlying rules for Nasdaq has changed.

The preexisting ruleset was used by investors to gauge their portfolio balance.

Now investors have to revaluate their portfolio based on the new ruleset as their fundamental risks have changed.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#28

Post by dogwalker5000 »

JumpCrisscross wrote: post #17
insane_dreamer wrote: post #16

Earlier quoted context omitted.

S&P wasn't fait accompli, but the NASDAQ 100 was

> S&P wasn't fait accompli, but the NASDAQ 100 was Sure. Nobody was properly making this distinction in social media, including on HN . Particularly with respect to the differences in scale and purpose between the NASDAQ 100 and S&P 500.

The fact that a fast track was even considered is controversial IMHO. People flipping out, especially if their retirement is tied up with those indices, is to be expected. No one wants to be a bag holder for billionaire insiders.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#29

Post by WarmWash »

JumpCrisscross wrote: post #25
karp773 wrote: post #22

Earlier quoted context omitted.

What's the urgency to bend the rules? It is not like SpaceX is banned for good. It will be included as soon as it meets the requirements.

> What's the urgency to bend the rules? If you’re buying into a tech-marketed fund like the NASDAQ 100 and it doesn’t include a large chunk of the tech market, you’re no longer passively investing in tech. You’re investing in an actively-managed fund. Historically, companies like SpaceX would have gone public earlier and grown into the index. Recognizing that has changed with multiple $1+ trillion IPO contenders make…

Yeah, but is SpaceX actually worth $1T or does Elon just think that because of how Tesla investors value Tesla?

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#30

Post by AceJohnny2 »

JumpCrisscross wrote: post #25
karp773 wrote: post #22

Earlier quoted context omitted.

What's the urgency to bend the rules? It is not like SpaceX is banned for good. It will be included as soon as it meets the requirements.

> What's the urgency to bend the rules? If you’re buying into a tech-marketed fund like the NASDAQ 100 and it doesn’t include a large chunk of the tech market, you’re no longer passively investing in tech. You’re investing in an actively-managed fund. Historically, companies like SpaceX would have gone public earlier and grown into the index. Recognizing that has changed with multiple $1+ trillion IPO contenders make…

> You’re investing in an actively-managed fund.

I see others are listening to the Money Stuff podcast ;)

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