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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

#141

Post by matwood »

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.

> 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.

I'm sure you know this, but the rules have been changed many times over the years. Now that companies IPO much later with huge market caps, I suspect we'll see more rule changes over time. The S&P 500 is fairly conservative, so they held tight this time. If these companies are still 1T+ 12 months from now, there will be a very strong argument that the market has decided these companies are important regardless of current profitability, and the S&P will likely have to revisit.

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

#142

Post by matwood »

KaiserPro wrote: post #74
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.

Its a sensible move. The spaceX IPO is a mess, and if it doesn't go full enron I'm not sure what will happen to the wider market.

BTW, Enron was in the S&P 500 when it went bankrupt. Other fun fact is that it was replaced with NVDA.

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

#143

Post by weird-eye-issue »

frozenseven wrote: post #96
LinguaBrowse wrote: post #42

Earlier quoted context omitted.

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]

That doesn't necessarily make it the best investment at this point in time. Especially on a short time horizon such as "a year or so" AI stocks could easily correct 50% or so. And if you think that sounds impossible then you probably don't have much experience with the stock market.

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

#146

Post by trumpdong »

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…

> But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function.

Let's put it this way then: the central bank can raise rates or it can crash the economy into a brick wall. In that sense, rates should be raised. We have the least competent regime in history right now though, so they might choose the latter option.

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

#147

Post by Dylan16807 »

smilekzs wrote: post #59
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.

> 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 tr…

> #2 is _much_ closer to #1 than #3 (let alone #4)

Even with linear scaling, being one third of the way between two numbers is not what I would call underlined-much closer. But zero punches above its weight here. Those extra orders of magnitude should make some impact on the scale.

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

#148

Post by JumpCrisscross »

petesergeant wrote: post #126
JumpCrisscross wrote: post #118

Earlier quoted context omitted.

> because only Nasdaq has the incentive to do it 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.

Why do you think they originally had inclusion criteria, and have the reasons for having those criteria changed? Why do you think Musk has made it so clear that he’s strongly weighting that inclusion in his choices?

> have the reasons for having those criteria changed?

I think it was reasonable to ask if they had. If SpaceX were a one off, it would be one thing. It's not. We have a line of potentially trillion-dollar IPOs raising about as much money as the most valuable tech companies in the world, Alphabet and Meta.

It's reasonable to ask if the definition of a large cap has changed. It's also reasonable to conclude that it hasn't, at least not in respect to minimum-float and profitability requirements.

> Why do you think Musk has made it so clear that he’s strongly weighting that inclusion in his choices?

Musk obviously cares, and almost certainly didn't restrain himself in pushing that care. That doesn't change that these questions and processes predate his engagement with them.

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

#149

Post by lelanthran »

frozenseven wrote: post #96
LinguaBrowse wrote: post #42

Earlier quoted context omitted.

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]

> The greatest tech revolution by far and people on this site are trying to movie their money away from it. I hope y'all will do an honest retrospective in a year or so.

I see this sentiment often, and think it is short-sighted:

1. The tech fails at the goal - profitability is what we see for any tech that augments humans, which isn't anywhere close to satisfying the trillions in debt, busting the market and bleeding trillions from the economy.

OR

2. The tech succeeds at the goal - humans are mostly not needed anymore other than for menial low-paid work. Economy slows, then almost completely stops.

What is the outcome you see that keeps you optimistic? How do you intend to avoid the soup kitchen if this all works out? Because, you see, if this all works out you will have nothing of value to contribute too.

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

#150

Post by kortilla »

gizajob wrote: post #51
kortilla wrote: post #32

Earlier quoted context omitted.

> 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.

Again, voting rights don’t really matter. Google famously split shares to hold control while going to the market.
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