Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

arstechnica.com

Post reply on HN
Print view View original

91–100 of 524 posts

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

#91

Post by dgoldstein0 »

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…

This take makes sense but isn't really accurate. A lot of companies have stock buy back programs in lieu of dividends; essentially, using their cash flow to manipulate their stock price instead of returning money to every investor. Now this doesn't guarantee a particular price usually, but does help push the price up when they are buying a significant amount from the market.

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

#92

Post by ExoticPearTree »

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…

> Why should SpaceX get exemptions from entry requirements to the S&P when every other company before it didn't?

I could give you a lot of non-stocks related examples of why rules should not be set in stone.

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

#93

Post by jjav »

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…

> Only dividend stocks have some base value connected to how well the company does.

That's not how it works. If the company has profits they can distribute it in many ways. Dividends is one, but not a great one because it forces you to pay taxes on it this year. Or they can buy back shares which increases the share price, which is better because then you don't have taxable income on that until you decide to sell. Or they can reinvest that money into the business to grow it, which is the ideal option, although not always possible.

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

#94

Post by JumpCrisscross »

kgwgk wrote: post #61
JumpCrisscross wrote: post #43

Earlier quoted context omitted.

> many pension funds are not sophisticated, they're small, underfunded, and getting taken for a ride by expensive advisors Who tend to come up with bumfuck benchmarks other than the common ones. Sometimes for good reasons. Often to justify their own comp. > Many would be better off using an S&P 500 index fund Maybe. They would probably be better off with some total-market funds (instead of biasing towards large caps,…

It’s true that S&P 500 is not the most popular US equities benchmark for pension funds. Russell is the preferred provider - and they will include SpaceX 5 days after the IPO.

> S&P 500 is not the most popular US equities benchmark for pension funds. Russell is the preferred provider

Where are you getting this from? Basically zero pension funds automatically track any single index. (There seems to be a misconception equating pension funds with retirement funds in general. Pension funds are, on the whole, remarkably sophisticated investors. Many pensions funds were private shareholders of these companies already.)

> Russell is the preferred provider - and they will include SpaceX 5 days after the IPO

Russell has loads of indices. Their total market index will quickly incorporate SpaceX. Same with S&P. There are also IPO indices that will incorporate it on day one, because that's what they're designed to represent.

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

#95

Post by JumpCrisscross »

energy123 wrote: post #80
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...

and Meta saying they want to issue. Combined with the IPO scramble there's a lot of dilution and raising hitting the same sector in a very short period of time. Can the public markets pony up the cash in the short timeframe? It seems investors said no, or at least the uncertainty was high enough that they trimmed the risk.

> Can the public markets pony up the cash in the short timeframe?

Yes, very easily, American households alone plop a few hundred billion to over a trillion dollars into the stock market every quarter. Whether investors want to is another question. (The answer, at least to the tune of $75bn for SpaceX, seems to be yes.)

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

#96

Post by frozenseven »

LinguaBrowse wrote: post #42
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’ve moved my S&P 500 investments to the Equal Weight index to reduce my exposure to AI. Quite aside from SpaceX, I think the large-cap tech companies are making some uncomfortably large bets on AI and any major upset could cause a domino effect. But as so many ETFs have a significant stake in large-cap US tech stocks (the top 10 holdings of the iShares MSCI World ETF is entirely comprised US Big Tech, making up 20%…

[flagged]

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

#97

Post by khriss »

JumpCrisscross wrote: post #90
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. Ther…

> Google and Berkshire got to be the only special babies with multiple classes of stock for a few years.

Wasn't this after their entry into the index?

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

#98

Post by JumpCrisscross »

khriss wrote: post #97
JumpCrisscross wrote: post #90

Earlier quoted context omitted.

> 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. Ther…

> Google and Berkshire got to be the only special babies with multiple classes of stock for a few years. Wasn't this after their entry into the index?

> Wasn't this after their entry into the index?

Yes. Then rules were changed. Then they were unchanged.

S&P is explicitly a committee-based index. It's not hard and fast rules driven. (Russell markets itself as being super duper rules based. It's a good niche. It's also so wildly complicated as to be, in practice, at least to me, indistinguishable from the committee-based method.)

Elon undoubtedly tried to corrupt this process. But there were loads of non-corrupt reasons to look at a few trillion dollars of market cap hitting the market and ask how that should impact how various indices are calculated. The answer we've come to, that the tech and total-market indices should reflect the change while large caps should not, is a pretty good one.

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

#99

Post by bruce343434 »

JumpCrisscross wrote: post #86
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…

> 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.

what happens when ALL the stocks have been bought back? what is the natural conclusion? you get extra points if you mention dilution i.e. oops we turned on the ~~money~~ stock printer and your stock is now actually worth less!

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

#100

Post by SwellJoe »

Allybag wrote: post #77
wg0 wrote: post #63

This is very smart of these folks because for just three companies, they can't ruin the trust and impeccable reputation they have built over the years. This decision alone is worth several trillion dollars.

Well, it might be a good decision but I think the possibility of Standard and Poor one day being worth trillions of dollars more than if they had included three companies a year or two earlier than when they inevitably join the index is absolutely zero.

You've used the word "inevitably". Are you sure it's inevitable? SpaceX is launching at a ridiculous valuation, has two bad businesses bolted on to one modestly successful one, and all together the revenue puts the company well behind companies with a market cap vastly smaller than what they're pricing the IPO at.

This is a ridiculous situation, a ridiculous valuation, and a very risky business (data centers in space? c'mon, be serious).

Post reply on HN