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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

#231

Post by iugtmkbdfil834 »

kd913 wrote: post #168
iugtmkbdfil834 wrote: post #127

Earlier quoted context omitted.

Heh. I would not discount narrative so fast. You may not believe it, but it does not mean others don't.

My theory is hedgies and investment banks using semi and ai hype as a liquidity bridge to drop into SpaceX which happens next week. Arm and AMD pumped to insane levels on basically nothing. What proof is there for your narrative versus mine?

:D The proof for theory tends to be somewhat stable, by which I mean: 'the theory can be tested and produces results in line with what the theory predicts.'

If you are asking why one theory tends to be better than another is qualitative at best, but irrelevant quick. Once the two theories settled in people's brains, it only exacerbated the sell off. In a sense, the theories were irrelevant. Their impact, however, was not.

In other words, I think you have the entire structure all wrong. It is not binary at all. Or, at least, it does not require for it to be mutually exclusive.

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

#232

Post by abustamam »

enaaem wrote: post #110
andsoitis wrote: post #60

Earlier quoted context omitted.

> 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…

Many people already have x% of their portfolio allocated to a growth fund, that might include fast growing AI companies. You need to keep the risk profile consistent. If you change the rules you mess up people's strategy.

Yeah if people wanted to change their risk profile they would, they wouldn't want their low risk investments to suddenly be high risk. That would suck and mean disaster if that person is heavily allocated to low risk near retirement time.

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

#233

Post by iugtmkbdfil834 »

bakies wrote: post #214
kd913 wrote: post #168

Earlier quoted context omitted.

My theory is hedgies and investment banks using semi and ai hype as a liquidity bridge to drop into SpaceX which happens next week. Arm and AMD pumped to insane levels on basically nothing. What proof is there for your narrative versus mine?

> AMD is nothing What? SpaceX is the hype not AMD guy

I will admit that I am starting to understand Musk's contempt for retail investors. edit: They have no problem lining behind supporting what is now effectively Musk oriented slush fund.

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

#235

Post by everforward »

kgwgk wrote: post #193
JumpCrisscross wrote: post #89

Earlier quoted context omitted.

> 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/…

You say you didn’t see it happening and I’m asking what would you have seen if you had seen it. What would have been different? Where would have you seen this pretrading that you didn’t see? Who is that someone that would have been selling those shares but didn’t?

Broad strokes, you would expect to see a withdrawal of funds from the market by anyone following equal weight funds. New entrant means you have to pull money out of existing stocks to re-allocate to the new entrant to maintain equal weights.

It would be visible at a macro level, you’d see a higher sell volume and probably a drop in price as all the equal weight funds rebalance.

There’s a heavy motivation to be the first mover here, because those sells will cause a supply spike and price drop. By being the first mover, you can rebalance before prices drop.

I don’t have sell volume data, but we didn’t see price drops so either a) the market did not believe and no one rebalanced, or b) few funds rebalanced, and the other funds disbelieved enough that they thought the risk premium was so small they could buy at a slight discount and profit, balancing supply and demand.

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

#236

Post by dtgriscom »

alecco wrote: post #183

Yesterday: "SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P" (bloomberg.com) https://news.ycombinator.com/item?id=48405718 Ars used to do deep insightful articles a couple of days after the news but today it's just regurgitated blogspam that is 2 days old news. And way more political. It's sad.

"Denied Fast Index Entry" is a much more honest title than "Rejects SpaceX", which is just click-bait.

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

#237

Post by cool_dude85 »

derf_ wrote: post #187
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%…

> I found S&P 500 Equal Weight to be pretty attractive. The rebalancing required to maintain equal weights means constantly selling your winners and buying more of your losers. That creates volatility drag. Stock returns are highly skewed: only about 4% of stocks outperform the market, and are responsible for most of its gains. By keeping your allocation to those stocks small through constant rebalancing, you are mis…

Selling winners and buying losers sounds an awful lot like "buy low, sell high".

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

#238

Post by kd913 »

JumpCrisscross wrote: post #170
kd913 wrote: post #168

Earlier quoted context omitted.

My theory is hedgies and investment banks using semi and ai hype as a liquidity bridge to drop into SpaceX which happens next week. Arm and AMD pumped to insane levels on basically nothing. What proof is there for your narrative versus mine?

> a liquidity bridge to drop into SpaceX What does this mean?

It means financial companies have been illogically pumping semiconductor companies the last 5 months despite the profits, royalties and supply chain being entire worse than a year ago.

They pumped ai adjacent stocks to draw retail in, to provide liquidity now when they are in theory forced to purchase SpaceX.

Effectively getting people to buy semi-ai stocks at a premium to fund their forced purchase for SpaceX.

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

#239

Post by vmg12 »

cool_dude85 wrote: post #237
derf_ wrote: post #187

Earlier quoted context omitted.

> I found S&P 500 Equal Weight to be pretty attractive. The rebalancing required to maintain equal weights means constantly selling your winners and buying more of your losers. That creates volatility drag. Stock returns are highly skewed: only about 4% of stocks outperform the market, and are responsible for most of its gains. By keeping your allocation to those stocks small through constant rebalancing, you are mis…

Selling winners and buying losers sounds an awful lot like "buy low, sell high".

Company performance doesnt follow a uniform distribution where each company is as likely to overperform as any other. Selling companies that are run well because their stock went up is a great way to miss out on a lot of money.
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