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Big relief for me. As a passive investor, I want the indices to follow the same passive strategy they always have, and specifically not make exceptions for specific companies like SpaceX wanted. Plenty of ways to get exposure to that stock without it going into the indices it is not qualified for.
I agree, but… Plenty? Really?
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I agree, but… Plenty? Really?
Just buy the stock or buy a mutual fund which invests in IT, AI, Tech what have you. Sooner or later they will probably also be included in the general index funds.
Big relief for me. As a passive investor, I want the indices to follow the same passive strategy they always have, and specifically not make exceptions for specific companies like SpaceX wanted. Plenty of ways to get exposure to that stock without it going into the indices it is not qualified for.
I agree, but… Plenty? Really?
And there are other reasons to be cautious. Many passive funds don't license the SP500 and instead mirror it with their own synthetic index. They are not bound to respect this decision.
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> 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 !
This can't happen in practice. It would require the company's value to fall below the buyback amount, which is itself a fraction of the company's cash and thus value. (Like, yes, I could engineer a weird failing company where this could happen. But that would just be describing a peculiarity of how the company failed. If the company is doing fine, this doesn't occur.)
If you have trouble with a public-market buyback, consider how tenders are done in private markets. You're a shareholder who has the option of selling back your shares. It's a direct way for you to tap the company's treasury as a shareholder. The company's shareholders could vote to distribute all the cash and assets in a buyback. But we have a word for that: liquidation.
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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…
This is as per Patrick Boyle's https://youtu.be/IHD8BDFYyGI?si=FZ52TSEYnpJwZ1FT
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AI can still have a massive impact while these three companies go nowhere. Same as the dotcom and same as the railroads.
These three companies can do great while their valuations go nowhere.
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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…
Sure, but we the only thing we know about the company is the current S1 filing. Need to time to see what all of that looks like. Fast tracking it and essentially forcing other people to buy without scrutinizing is the problem. They may very well be worth the money they claim, but we won't know until after they've proven it. That's what the rules are there for.
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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
I'm not going to say Nasdaq didn't do this corruptly. But there are plenty of good reasons for the NASDAQ 100, an index marketed as being tech focussed, bending over to include AI issues that don't require nefarious explanations.
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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%…
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Crazy to see the Twitter behavior here of really smart, well conveyed top level comments replied to by weird propaganda pushing bottom feeders.
HN discussion quality has deteriorated dramatically, especially for anything AI related.