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S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

arstechnica.com

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Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#51

Post by gizajob »

kortilla wrote: post #32
figmert wrote: post #27

Earlier quoted context omitted.

Why is that relevant? The rules are in place for a reason, why does it matter what the percentage is? They're not profitable. When they prove they're worth the dollars, they can be included, per the rules. Also, S&P500 has a current market cap of $67 trillion, 0.3% of that is some $200billion. That is essentially a wealth transfer to the rich. They don't need it.

> That is essentially a wealth transfer to the rich. They don't need it. These are not valid arguments. The companies that get added to the S&P are always owned in some fraction by rich people. SpaceX is obviously majorly owned by Elon, but it’s also owned by regular employees, a bunch of private investors and other funds that regular people invest in. > They're not profitable. Right > When they prove they're worth t…

Mostly owned by Elon who has 84% of the voting rights. Completely his entity and it can’t be denied that the value of an interesting space business has been massively inflated by tacking a worthless AI business onto it.

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#52

Post by vasco »

JumpCrisscross wrote: post #40
gizajob wrote: post #37

Earlier quoted context omitted.

[flagged]

> This news tanked 5% off the Nasdaq yesterday No, it did not. The market moved in reaction to earnings misses from e.g. Broadcom [1] and the strong jobs report. [1] https://finance.yahoo.com/markets/article/broadcom-stock-sin...

The market moved in reaction to the totality of events that happened in the world all averaged out through the actions of the participants, anyone who says "this" was what happened on any day is wrong. Some days have dominating factors but even if the event is the dominant one, the reason why it has the impact it does might be a 3rd or 4th level effect.

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#53

Post by kortilla »

lumost wrote: post #8
joxdosba wrote: post #7

Earlier quoted context omitted.

[flagged]

It's quite clear that there is an effort to engineer mega financial vehicles that index tracking funds are forced to buy. The incentive to do so is massive, and there is nothing illegal about it. As a holder of index funds such as the S&P, I'd much prefer that these vehicles are excluded for at least some period of time to ensure that the greater fool isn't simply my index portfolio.

Are you happy to be invested in Tesla? It is not profitable quarter to quarter and is included in your fund.

Why do you tolerate that and not this?

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#54

Post by JumpCrisscross »

vasco wrote: post #52
JumpCrisscross wrote: post #40

Earlier quoted context omitted.

> This news tanked 5% off the Nasdaq yesterday No, it did not. The market moved in reaction to earnings misses from e.g. Broadcom [1] and the strong jobs report. [1] https://finance.yahoo.com/markets/article/broadcom-stock-sin...

The market moved in reaction to the totality of events that happened in the world all averaged out through the actions of the participants, anyone who says "this" was what happened on any day is wrong. Some days have dominating factors but even if the event is the dominant one, the reason why it has the impact it does might be a 3rd or 4th level effect.

> anyone who says "this" was what happened on any day is wrong

There is never a singular reason. But there are negligible reasons. S&P not changing its rules was a negligible reason for today's tanking.

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#55

Post by petesergeant »

frikskit wrote: post #28
JumpCrisscross wrote: post #18

Earlier quoted context omitted.

> Major W. Regular people were going to get robbed blind Not really. One, it was unlikely to happen. The market not pricing in any rebalancing communicated that. Two, the magnitude–even for the S&P 500–would have been small. About a third of stocks are in passive strategies, about 15% in any index, and while most of that is the S&P 500, the index market is incredibly competitive. S&P made the right move. But the trag…

What was unlikely to happen? It already happened in Nasdaq. It’s nice that it didn’t for S&P but for most investors it already did happen, so I’m not sure the ‘whatever’ attitude is warranted. Also, since when is it appropriate/intellectually OK to respond to allegations of corruption by saying ‘stop freaking out, it’s only a small amount of corruption PER PERSON’.

It was unlikely to happen anywhere but the Nasdaq-100, because only Nasdaq has the incentive to do it: https://news.ycombinator.com/item?id=48411713

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#56

Post by d--b »

JumpCrisscross wrote: post #40
gizajob wrote: post #37

Earlier quoted context omitted.

[flagged]

> This news tanked 5% off the Nasdaq yesterday No, it did not. The market moved in reaction to earnings misses from e.g. Broadcom [1] and the strong jobs report. [1] https://finance.yahoo.com/markets/article/broadcom-stock-sin...

The strong job numbers too.

On a side note, I find it very sad that strong job numbers make stock plummet.

It really is an indication that the stock market is mostly speculative and not concerned about the actual economy.

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#57

Post by JumpCrisscross »

d--b wrote: post #56
JumpCrisscross wrote: post #40

Earlier quoted context omitted.

> This news tanked 5% off the Nasdaq yesterday No, it did not. The market moved in reaction to earnings misses from e.g. Broadcom [1] and the strong jobs report. [1] https://finance.yahoo.com/markets/article/broadcom-stock-sin...

The strong job numbers too. On a side note, I find it very sad that strong job numbers make stock plummet. It really is an indication that the stock market is mostly speculative and not concerned about the actual economy.

> It really is an indication that the stock market is mostly speculative and not concerned about the actual economy

Not really. Strong jobs numbers in the midst of 3+ percent inflation means rates should go up. That, in turn, dilates time on future earnings. So making a company's future earnings more-heavily discounted will be a net drag on valuations even if the jobs numbers indicate those numbers, near term and far, will be higher.

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#58

Post by kgwgk »

JumpCrisscross wrote: post #39
kgwgk wrote: post #34

Earlier quoted context omitted.

> The market, broadly, never priced in a rebalancing of the S&P 500 And if you had seen it what would have that pricing looked like?

> if you had seen it what would have that pricing looked like? Look up rebalancing trades, or, less graciously, rebalancing front running. If the index is going to rebalance to include a new entrant, you'll see the other components trade down in anticipation. It's a very tight signal, and it wasn't present to any measurable degree for the S&P 500.

Again, what would it have looked like? What does “other components trade down in anticipation” mean when SPCX doesn’t even exist?

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#59

Post by smilekzs »

figmert wrote: post #27
zeroonetwothree wrote: post #14

Earlier quoted context omitted.

They weight by free float so it would been something like 0.3%. Hardly the end of the world

Why is that relevant? The rules are in place for a reason, why does it matter what the percentage is? They're not profitable. When they prove they're worth the dollars, they can be included, per the rules. Also, S&P500 has a current market cap of $67 trillion, 0.3% of that is some $200billion. That is essentially a wealth transfer to the rich. They don't need it.

> why does it matter what the percentage is

This percentage directly determines the influence on SP500 index funds holders (SPY, VOO, etc.).

The outcome could have been:

1. not included (0%)

2. included, weight by free float (0.3%) --- 54th in the list between $AXP and $MCD

3. included, weight by free float x 3 (0.9%) --- 19th in the list between $ORCL and $JNJ

4. included, weight by market cap (1.75 trillion / 67 trillion = 2.6%) --- 8th in the list between $AVGO and $META

https://www.slickcharts.com/sp500

#2 is _much_ closer to #1 than #3 (let alone #4), meaning that had an exemption been made to allow SpaceX in, given the rest of the existing rules, at least the impact to ETF holders would not be outblown. The same could not be said for NASDAQ , which was the main source of all the debate.

Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

#60

Post by andsoitis »

zippyman55 wrote: post #3

Yep!! Respect to them. I was planning to move to an equal weight index but this gives me a little more time to evaluate options.

> I was planning to move to an equal weight index but this gives me a little more time to evaluate options.

S&P requires 4 consecutive profitable quarters, amongst other requirements, so if one of the new mega caps like SpaceX or Anthropic or OpenAI get included, you’d probably want to get the benefit of their performance.

Put differently, if one previously specifically picked an index fund that is not equal weighted, why would you change from that strategy?

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