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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

#451

Post by zugi »

mattbrewsbytes wrote: post #274

Letting new stocks marinate in the market and get 4 quarters of SEC filings along with following all the GAAP accounting practices will definitely help evaluate them before inclusion. The last large boom/bust cycle had a couple of companies, at least, that were doing illegal things. I'm not stating that these three are, just that nobody knows and the process should play out. I do wonder if any of these three companie…

> using AI to do their accounting and bookkeeping

A friend gave AI access to his accounts to summarize his finances.

On reviewing the AI-generated report, he spotted a $500 monthly loan payment that he didn't recognize. He asked AI where it came from, and AI admitted that it was a mistake.

Perhaps in its training data, most people have a $500 loan payment, so AI just stuck one in there.

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

#452

Post by stevenhuang »

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.

Presumptuous of you to think your own preferences morally superior to the preferences of others.

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

#453

Post by jgilias »

jstummbillig wrote: post #408
codegeek wrote: post #298

Earlier quoted context omitted.

Agreed. S&P 500 needs to be seriously gatekeeped. We need safer boring companies in there thatbhave been peoven over a long period of time. Nothing against these companies but they are not proven and ready for S&P 500.

Let's say Alphabet shifts further to ~become a 100% AI company in the same way that Anthropic and OpenAI are. Should they be removed from the index? If not, why not?

If they then stop fulfilling any of the inclusion criteria (profitability, say), they should be removed, yes. Isn’t that obvious?

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

#454

Post by zugi »

asdfasgasdgasdg wrote: post #273
zhivota wrote: post #30

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.

Well it’s just the S&P. Other big indices may include it eg the Russell 3000. But it’s not quite as big of a deal as it seems because the market cap on which they scale is the float not the whole value of the company.

Thanks for pointing this out!

It seems obvious in retrospect, but the fact that SpaceX will be "valued" at $1.75 trillion after the IPO is irrelevant when only $75 billion worth of its stock will be publicly traded.

$75 billion in float-adjusted market cap puts it around 180-190th in the S&P 500. So sure, it will likely get in there eventually, but there's no rush to bend the rules to get it in right away.

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

#455

Post by aeternum »

jgilias wrote: post #453
jstummbillig wrote: post #408

Earlier quoted context omitted.

Let's say Alphabet shifts further to ~become a 100% AI company in the same way that Anthropic and OpenAI are. Should they be removed from the index? If not, why not?

If they then stop fulfilling any of the inclusion criteria (profitability, say), they should be removed, yes. Isn’t that obvious?

No because profitability is only required to enter not to stay.

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

#456

Post by tick_tock_tick »

zhivota wrote: post #30

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 mean as a passive investor this stuff should terrify you. You're learning that your "passive" is actually quite active. It's why people suggest VTI over VOO/SPY for "true" passive.

If you want to be active then keep your positions but just know and accept the active label.

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

#457

Post by matthewdgreen »

doctorpangloss wrote: post #445
tim333 wrote: post #390

Earlier quoted context omitted.

SpaceX got NASDAQ to change their rules so I guess people thought S&P might be similar. NASDAQ probably did it because they make money by the listing going to them rather than the NYSE.

Did you consider they are adding SpaceX to the index because it is a good idea?

My financial advisor might have recommended that expensive fund to me because it was a good idea, even though he also received kickbacks from the fund for doing so. The point of being a trustworthy index is to avoid the perception of conflicted interest.

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

#458

Post by dingaling »

dannyw wrote: post #327
jstummbillig wrote: post #316

Earlier quoted context omitted.

> just that nobody knows I don't understand. Guilty until proven innocent, because they... are too successful? What could possibly be the generalizable idea here? Should we have a speed limit for too successful companies, even if they might be doing super valuable work? Who would we trust to be the judge of the potential havoc that bad capital allocation in such a moment might cause? EDIT: To be more clear, I don't h…

These companies are allowed to go public and anyone can buy their shares. Since the start, the S&P 500 has had a simple and consistent profitability screen. Your company must be GAAP profitable in the past quarter, as well as for your past four quarters when summed up. The S&P 500 committee isn’t targeting these companies. They are simply choosing to keep the rules they’ve had in the beginning. And when these compani…

> companies are supposed to be profitable!

No, companies are meant to be successful.

"Profit" is surplus money that could have been invested earlier in R&D, product development, employee benefits or customer service.

Instead, many companies decide to forego developing themselves for the 'advantage' of a 'record profits' headline and the privilege of giving a quarter of the surplus away as tax.

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

#459

Post by d--b »

JumpCrisscross wrote: post #57
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.

> 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…

tbh, it makes it even sadder.

It means the entire economy runs on borrowing to fuel growth.

When all that cash is still coming fron QE, it’s gross.

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

#460

Post by outside2344 »

mattbrewsbytes wrote: post #274

Letting new stocks marinate in the market and get 4 quarters of SEC filings along with following all the GAAP accounting practices will definitely help evaluate them before inclusion. The last large boom/bust cycle had a couple of companies, at least, that were doing illegal things. I'm not stating that these three are, just that nobody knows and the process should play out. I do wonder if any of these three companie…

SpaceX is a junk stock. It has no place in the S&P 500
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