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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

#81

Post by energy123 »

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.

These companies are capex heavy and need to reach into the capital markets to sustain their growth. The cost of capital is correlated with inflation. Why is this the fault of the stock market? Maybe blame the government for diluting the money supply?

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

#83

Post by JumpCrisscross »

altmanaltman wrote: post #62
JumpCrisscross wrote: post #54

Earlier quoted context omitted.

> 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.

But how can you quantify that? There is no way to prove it, the market cannot say "I wasn't moved by this, I was actually moved by that and this part was actually just negligible." Isn't it all subjective in the end because nobody really makes their trades with verifiable notes expressing the exact reason. So we can only guess right?

> how can you quantify that?

Precedent and timing. Rates-related news is always going to massively shift the market, and the market shifting right after the jobs report is a pretty clear signal.

Moreover, S&P holding course wasn't new information–there was zero evidence of anyone pre-trading a rebalancing, which means the market didn't expect S&P to materially change its rules.

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

#84

Post by JumpCrisscross »

andric wrote: post #71
JumpCrisscross wrote: post #57

Earlier quoted context omitted.

> 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…

Yep. Job numbers are the “actual economy” – the actual economy is driven by wages and consumption. Stronger wages → stronger consumption → higher demand-pull inflation. But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function. Central banks intervening with interest rate adjustments is what distorts the prices of equities downward, when inflati…

> higher inflation implying that “rates should go up” is central bank doctrine

Uh, no. If you have no central bank, more consumption and more employment means more demand for money. Ceteris paribus, that will raise rates. (Our own history with free banking is more complicated since the only inflationary period was driven by specie introduction from California's gold rush. The predominant problem in antebellum America was deflation and bank collapses.)

You're correct inasmuch as central banks quicken this reaction, and–when done properly–dampen it. But the fundamental engine is emergent, at least for nominal rates.

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

#85

Post by bruce343434 »

andric wrote: post #68
bruce343434 wrote: post #65

Earlier quoted context omitted.

> not concerned about the actual economy. Why would it be? Non dividend stocks only have value because other people think they have value (i.e. greater fool theory). Only dividend stocks have some base value connected to how well the company does. (Higher dividend if it does well, lower if it does poorly.) But they still also have a lot of "greater fool" value. Beyond dividend, stocks have no intrinsic value. Nowaday…

They do have intrinsic value! Growth stocks trade on a multiple of earnings : earnings have intrinsic value.

That's just dividend stocks with more shady. We promise to invest the dividend you would have gotten into ourselves to become more valuable bro. But that will only be reflected in "valuations" that don't directly affect your bank account. It is still the greater fool theory.

The worst is growth stocks that are a wrapper around actual dividend stocks. Beyond number going up, what actual concrete utility are you getting? Beyond waiting for the line to go up to eventually sell it to a greater fool, what can you _actually_ do with it? It's not real.

It is only real because enough people believe it is real. And they believe it because they want to believe it, because they are greedy and want easy money.

Once the market tanks and the greed turns into fear, there will be bagholders and the brokers will be laughing. The people who skim fees and percentages will be cozy.

"Now is the time to invest" they will say, because from here the line can only go up! And it will, eventually, because people want to believe, because they are greedy.

The only thing the stock market makes money on is greed. That is the thing that drives stock value. Not the economy.

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

#86

Post by JumpCrisscross »

bruce343434 wrote: post #65
d--b wrote: post #56

Earlier quoted context omitted.

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.

> not concerned about the actual economy. Why would it be? Non dividend stocks only have value because other people think they have value (i.e. greater fool theory). Only dividend stocks have some base value connected to how well the company does. (Higher dividend if it does well, lower if it does poorly.) But they still also have a lot of "greater fool" value. Beyond dividend, stocks have no intrinsic value. Nowaday…

> Non dividend stocks only have value because other people think they have value (i.e. greater fool theory)

Alphabet buys back shares equal to the GDP of Uganda every year. There are more ways to return capital than through dividends.

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

#87

Post by torlok »

andric wrote: post #68
bruce343434 wrote: post #65

Earlier quoted context omitted.

> not concerned about the actual economy. Why would it be? Non dividend stocks only have value because other people think they have value (i.e. greater fool theory). Only dividend stocks have some base value connected to how well the company does. (Higher dividend if it does well, lower if it does poorly.) But they still also have a lot of "greater fool" value. Beyond dividend, stocks have no intrinsic value. Nowaday…

They do have intrinsic value! Growth stocks trade on a multiple of earnings : earnings have intrinsic value.

To who? There's no immediate benefit of holding a stock that doesn't pay out beyond voting rights, or a fraction of company assets. As parent said, you're just hoping to sell it to somebody down the line for more. It's speculation. The market is liquid, and a lot of people believe these stocks have value, but it's still speculation.

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

#88

Post by hugh-avherald »

q3k wrote: post #29
danielovichdk wrote: post #16

Stocks and money. It's so boring. I will go drive my old German car now, and get a bit drunk in a bottle of Nebbiolo while listening to some French lunatic with a piano. Enjoy your trip to Mars and your self driving toy cars. The world is off its rails. Bit time.

What's your SKILLS.md? Is your flow multi-agentic?

`--dangerously-skip-hype`

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

#89

Post by JumpCrisscross »

kgwgk wrote: post #58
JumpCrisscross wrote: post #39

Earlier quoted context omitted.

> 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?

> What does “other components trade down in anticipation” mean when SPCX doesn’t even exist?

Let's model an equal-weighted index with nine components, with each thus representing 1/9th of the index's allocation.

You learn that a tenth member is going to be added. You don't know who it is. But you know that each of those nine will, after that member is included, represent 1/10th of the index's allocation versus the 1/9th they did before. You know a precise bucket of trades everyone following the index is going to mechanically enter into. Which means it behooves you to be on the other side of it.

When rebalancing–or new inclusion–occurs, you see this pre-trading. Similar to merger arb. But much more clear as a signal because you see it in precise ratios across the index's members. It's difficult to pick up for small indices. But for something like the S&P 500, you'd expect to see someone selling those shares in anticipation, and, now that the rule isn't going into effect, someone dumping those shares in those ratios.

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

#90

Post by JumpCrisscross »

khriss wrote: post #66

A lot of comments here are saying that the impact on the S&P would have been 'minimal' since the S&P is float weighted. So SpaceX would have been ~0.3% of the index. The point isn't that the impact would have been minimal. It's that changing the rules to suit the rich and connected is the literal definition of crony capitalism. Why should SpaceX get exemptions from entry requirements to the S&P when every other compa…

> It's that changing the rules to suit the rich and connected is the literal definition of crony capitalism. Why should SpaceX get exemptions from entry requirements to the S&P when every other company before it didn't?

The S&P grandfathers in loads of shit. Google and Berkshire got to be the only special babies with multiple classes of stock for a few years.

The S&P tries to represent large cap American stocks. There was a genuine debate around whether SpaceX et al represent large cap stocks. Elon et al tried to put their thumbs on the scale, of course, but that wasn't the driving concern, this has been a debate that has been happening for a while.

The weird thing is linking it to Elon is absolutely titillating. So that's what influencers did. It's a maddening story. But it really isn't true, and it was even less true when the S&P rule changes were being misrepresented as faits accomplis.

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