Two words - Thank Goodness.
Before the flood of money from the index funds arrive, I'd love to see what's the right valuation for them.
SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
151–160 of 542 posts
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#152Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#153Earlier quoted context omitted.
On a fundamental level, the S&P 500 index is meant to be a benchmark of the market. Journalists, policymakers, investment managers, politicians, regular investors, everyone I know all use the S&P 500 as the benchmark of the US stock market. If a significant percentage of the market is excluded from the index because they don't meet index inclusion criteria, then then index stops being a useful benchmark.
> If a significant percentage of the market is excluded from the index because they don't meet index inclusion criteria, then then index stops being a useful benchmark. So what's the reason for fast entry specifically? If it's a significant portion of the market and will remain so, it doesn't need an accelerated entry. A benchmark should be conservative about new entrants so that it doesn't turn from a market benchma…
Because the index needs accuracy. If a company is 1-2% of the total US market cap and not included in the index, then the index is wrong right now. The longer this company is not in the index, the longer this error compounds.
In the coming few months, multiple giga-cap companies (SpaceX, OpenAI, Anthropic) are all planning to IPO. These companies will likely never meet S&P profitability inclusion criteria for the next 5 years. These are not bad companies, but because the S&P inclusion criteria were written for old GAAP profitable companies, and not high-growth companies that invest their cashflow into company growth over profits. Excluding some of the most civilization changing companies from the benchmark means the benchmark is doing a terrible job.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#154Looks like US society and its systems are well and alive despite the usual doom and gloom.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#155Earlier quoted context omitted.
what's the argument for it being a scam?
shady debt offloading onto its sibling financing entity, which is run by Carvana CEO's father, a man convicted of fraud
> a man convicted of fraud
Most practitioners in the field see that as a very strong signal of future fraud.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#156Earlier quoted context omitted.
It’s a public benchmark fund that has much of its value based on its decisions being publicly stable and publicly consistent. Who would want to invest in a benchmark fund with arcane(the literal term as opposed to mundane) rules that were privately decided? If your statement is accurate it sounds like moving out of such a fund would be prudent. I feel like it’s not accurate since they are sticking to their guns and n…
> Who would want to invest in a benchmark fund with arcane(the literal term as opposed to mundane) rules that were privately decided? There are lots of rules-based funds. S&P is transparently committee based. It’s why dual-class new entrants are banned, but Google and Berkshire are grandfathered in. There is a genuine debate on rules versus committees in the index world. But S&P has stuck to its guns as a bastion of…
> Everyone picking the S&P 500 over its competitors chooses that.
I'm fairly confident most people deciding to allocate to s&p trackers have no idea about rules-based vs committee-based governance. They just pick the default. And that default can quickly change if the S&P starts making weird/unpopular decisions in a highly publicized situation.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#157Earlier quoted context omitted.
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.
You're making a similar mistake treating it as fait accompli that SpaceX will tank between IPO and some future date, but that isn't a given either.
sure it's not a given, but I certainly am not confident enough that it won't happen to bet my money in it, which I would automatically be doing if it was admitted to the SP500
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#158Earlier 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.
I would't be surprised if the freak-out reaction to SpaceX being on the nasdaq100 and even being considered for the s&p500 was a strong factor in S&P saying no; if so than the histrionics were worth it.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#159Earlier quoted context omitted.
> If a significant percentage of the market is excluded from the index because they don't meet index inclusion criteria, then then index stops being a useful benchmark. So what's the reason for fast entry specifically? If it's a significant portion of the market and will remain so, it doesn't need an accelerated entry. A benchmark should be conservative about new entrants so that it doesn't turn from a market benchma…
Because the index needs accuracy. If a company is 1-2% of the total US market cap and not included in the index, then the index is wrong right now. The longer this company is not in the index, the longer this error compounds. In the coming few months, multiple giga-cap companies (SpaceX, OpenAI, Anthropic) are all planning to IPO. These companies will likely never meet S&P profitability inclusion criteria for the nex…
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Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#160Earlier quoted context omitted.
> If a significant percentage of the market is excluded from the index because they don't meet index inclusion criteria, then then index stops being a useful benchmark. So what's the reason for fast entry specifically? If it's a significant portion of the market and will remain so, it doesn't need an accelerated entry. A benchmark should be conservative about new entrants so that it doesn't turn from a market benchma…
Because the index needs accuracy. If a company is 1-2% of the total US market cap and not included in the index, then the index is wrong right now. The longer this company is not in the index, the longer this error compounds. In the coming few months, multiple giga-cap companies (SpaceX, OpenAI, Anthropic) are all planning to IPO. These companies will likely never meet S&P profitability inclusion criteria for the nex…
> If a company is 1-2% of the total US market cap
Over what time horizon should that number be computed? Every day? Every second? Every month/quarter?
It is not as simple as it seems.