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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

#401

Post by BeetleB »

czhu12 wrote: post #281

This does seem sensible and I’m glad most of my holdings are in s&p funds. Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund, if you hold to track broad market performance? Wouldn’t that have a massive blind spot on AI related growth? Whether or not I personally think ai is over hyped or not, the whole point of these ETFs is to make sure I don’…

> Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund

The same downsides as not having giant private companies in your fund.

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

#402

Post by tristanj »

cman1444 wrote: post #360
tristanj wrote: post #344

Earlier quoted context omitted.

But that wasn't going to happen with the S&P 500, the proposal was to reduce inclusion time from 12 months to 6 months, and this did not pass. 6 months is more than enough time for price discovery to occur. And even if it was added to the index immediately after IPO, index weighting in S&P is float weighted, SpaceX at IPO will have minimal float, and SpaceX would be ~0.125% of the index at IPO. Not much to matter.

That ".125% is not much to matter" argument also cuts the other way, against the Matt Levine argument that the S&P is excluding trillion dollar companies and should adjust the rules for them. Should S&P really adjust the rules for such a small portion of the index?

Yes, because that number increases to 1-2% of the index after the IPO lockup period ends.

There are three IPOs coming this year that meet this criteria.

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

#403

Post by vannevar »

infecto wrote: post #372
john_strinlai wrote: post #368

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Carvana#Controversy " In January 2025, short-selling investment firm Hindenburg Research published a report titled "Carvana: A Father-Son Accounting Grift For The Ages," in which it disclosed a short position against the company. The report alleged that Carvana's financial turnaround was a "mirage" propped up by accounting manipulation and lax loan underwriting. " " A class-action securi…

[flagged]

>...if they indeed are running a ponzi it would be surprising it could last so long.

There's a practice in the loan industry called "pretend and extend," which basically means endlessly extending credit to lendees who are behind to avoid acknowledging the loss. Remember, in Carvana's case the loan buyer only exists to take on debt, not be a going concern. I think much of the market actually realizes Carvana is a scam, they just see that it is a relatively sustainable one as long as the government doesn't step in. And they don't see that happening, particularly with the current administration.

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

#404

Post by czhu12 »

Analemma_ wrote: post #393
czhu12 wrote: post #281

This does seem sensible and I’m glad most of my holdings are in s&p funds. Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund, if you hold to track broad market performance? Wouldn’t that have a massive blind spot on AI related growth? Whether or not I personally think ai is over hyped or not, the whole point of these ETFs is to make sure I don’…

The new stocks are still going in, they're just going in after a year (the normal rules), rather than 5 or 15 days. The outrage here wasn't that the stocks were going into the indexes at all, it's that they were going in before price discovery, several quarters of earnings, more float, and expiration of insider lock-up periods, which seemed especially sketchy because of the (correct or not) perception that these IPO…

It seems the general consensus on HN is that they are overvalued and for sure will collapse in value down the road, I could imagine some frustration down the road if these companies actually become, say, 4T by the time they get added to indices.

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

#405

Post by rurp »

tristanj wrote: post #49
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…

At a fundamental level, an index is supposed to reflect the market. If the current market is IPO-ing unprofitable companies at absurd multipliers, the index should reflect that. Because that is the market. The longer major indexes exclude these companies, the further the index strays from representing the market, and the worse they do their core job of tracking it. It's not the index's fault that market is pushing ou…

No, an index reflects a specifically defined subset of the market. The S&P 500 is very much not trying to include the entire stock market. There are more than 500 public companies...

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

#406

Post by infecto »

epolanski wrote: post #399
infecto wrote: post #387

Earlier quoted context omitted.

Interesting those are value funds? Of course that was not what I was asking or what this thread was about.

Your question is still not what you're asking. Passive funds do nothing but follow indexes, so what you're really asking is "have value indexes ever beaten the general sp500 index?". And the answer is yes, e.g. both the S&P 500 Value Index and S&P 500 Pure Value Index have beaten the S&P 500 historically. Small Cap indexes, have also *significantly* outperformed the S&P 500 from 1927 till today (a compounded 13.1% an…

No you’re just assuming what I am asking. You have proven my point so thank you. No examples and lots of buts and exceptions. We are probably talking around each other to some degree but that’s ok!

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

#407

Post by chasd00 »

expedition32 wrote: post #303

I am currently reading a book about the post war history of the Amsterdam stock exchange and it's quite funny reading about the booms and busts. Although I am in my 40s I had already forgotten a lot- but yeah I was there in the 1990s. Repressed traumatic memories. Dutch consumers really soured on stocks when that house of cards collapsed. I would say "it is happening again" but at least now we have bots who trade for…

I feel like this drama is another example of the overall society change toward the culture of victimhood. Now it's passive investors outraged about being victimized by stock market index rule changes. The answer is, if you're so upset and impacted then cease being a passive investor. But then the standard reply is "well what about all the retirement accounts and people who just can't adjust?!". Those accounts are in target date funds actively managed for risk anyway so it doesn't matter. For the people who adjust their 401k's as they see fit, well, they should keep doing that.

I feel like SP500 made the right decision because the proposed changes don't really align with the purpose of the SP500 IMO but i'm not a financial expert. The HN drama on some issues is a sight to behold.

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

#408

Post by [deleted] »

infecto wrote: post #392
rchaud wrote: post #112

Good. Indexes are supposed to be slow-moving, precisely due to their entry requirement of sustained profitability that skews towards mature companies. All that an inclusion of these new companies would accomplish is a bailout of their stockholders by pension funds and ETFs where millions of regular people shoulder all the downside risk. SpaceX and OAI stock will be available through Robinhood, Questrade and all the o…

Good for the SP500 but I don’t think it’s true that indexes need to be slow moving. They can serve any purpose! Comparatively I think it makes sense Nasdaq100 would want to include it earlier. Not all indexes need to be slow moving or representative of a buy and hold type strategy. Maybe you only want to capture the highest volume in daily activity for example.

[deleted]

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

#409

Post by TazeTSchnitzel »

ProjectArcturis wrote: post #400
boringg wrote: post #371

Earlier quoted context omitted.

More like its a competition to get the listing -- not dissimilar to Amazon shopping cities for its corporate base. Set up a competition and get the best deal would be my speculation on why it was done (as well as goose the demand).

You seem to be confusing "listing" - the stock exchange where a company chooses its stock to trade (i.e. NYSE, AmEx, Nasdaq) with "indexes" - a list of stocks that is often the basis for index funds. The Nasdaq 100 is not the same as Nasdaq. A company can be in many indexes but only one listing. There may have been competition for the listing but there is not competition between indexes for inclusion.

The implication is that Nasdaq (company) changed the rules for the Nasdaq 100 (index) in order to get the listing on Nasdaq (stock exchange).

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

#410

Post by NewJazz »

skeptic_ai wrote: post #283
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…

Sp500 is not passive. Keeps updating the rules every few years. https://www.reddit.com/r/stocks/comments/1tvuhgy/sp500_100_y... See top relevant changes in 100 years

Fyi reddit is now consistently authwalled on mobile (at least for me). You may want to extract any meaningfully information and rehost it.
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