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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

#491

Post by oarla »

macNchz wrote: post #478
oarla wrote: post #472

I don’t have any background in finance, but what is stopping these companies from creating their own index and promoting it heavily? They have the market cap and the capital backing to do it I presume.

Because that doesn't force tons of passive investment dollars to participate. Being a part of the S&P500 doesn't require heavy promotion, they'd just get a slice of the investment from the millions of people who auto-invest money each month in retirement programs that buy S&P500 funds (among other things). There are already other indexes and funds where you can invest in high-tech/growth companies, but the people who…

Thanks, makes sense now why they’re pushing for it.

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

#492

Post by tananaev »

zugi wrote: post #454
asdfasgasdgasdg wrote: post #273

Earlier quoted context omitted.

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.

Wait until you hear about float multiple Nasdaq is doing.

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

#493

Post by abustamam »

zajio1am wrote: post #465
abustamam wrote: post #263

Earlier quoted context omitted.

Stocks and money should be boring for most people. I'm not a financial adviser and this isn't financial advice but I believe no one with a net worth less than $2m should ever buy an individual stock. Invest in a target date retirement fund for your 401k. Same for Roth Ira. If you have more money to invest after that, invest in an index that aligns with you values (for example I invest in an ESG index for environmenta…

> for example I invest in an ESG index for environmental, social, and governance, ie no weapons or drugs So, no weapons for Ukraine?

Seems like my tax dollars do plenty of that without my explicit consent. No need to invest in that more.

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

#494

Post by abustamam »

carlosjobim wrote: post #397
abustamam wrote: post #263

Earlier quoted context omitted.

Stocks and money should be boring for most people. I'm not a financial adviser and this isn't financial advice but I believe no one with a net worth less than $2m should ever buy an individual stock. Invest in a target date retirement fund for your 401k. Same for Roth Ira. If you have more money to invest after that, invest in an index that aligns with you values (for example I invest in an ESG index for environmenta…

On the contrary: People with a low net worth have very few opportunities to scratch and claw their way out of their holes in this global feudal system. They are the ones who need to be able to make high-risk, high-reward investments. A conservative 10% return on a 2 million dollar investment is a very nice 200 000. A conservative 10% return on a 20 000 dollar investment is just 2000. If you're not born rich in this w…

Anecdotally, I know more people who have clawed out of poverty with hard work/education than I know people who got lucky with an investment. And I know plenty of non-poor people who got lucky with investments via IPO or crypto.

> at worst you loose your savings

This is a pretty optimistic take on how much money people who live paycheck to paycheck can actually save. I'd probably suggest that poor people with savings start a business over investing.

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

#495

Post by abustamam »

groundzeros2015 wrote: post #396
abustamam wrote: post #375

Earlier quoted context omitted.

That's true, but what are the alternatives? Personally I do have alternative investments (crypto, random held stocks) but it's because it's fun money - if it goes to zero, I'm not going to lose the house. If it's the first time it's failing then there's really nothing anyone can do to prepare for it, and I certainly wouldn't recommend laypeople to try to time the market.

Alternatives include - paying a mutual fund manager (who will skip the SpaceX ipo) - other assets classes like real estate and bonds - less diversified stock holdings In this story we determined that S&P is going to choose a path different that other ETFs. Does that mean these ETFs differ in quality? Which should you pick?

A properly diversified portfolio should have bonds even with a lower risk profile. Some even include real estate now, since REITs are so popular. Target date funds do this automatically, and rebalance, cheaply.

Mutual funds aren't bad but the average person won't realize that they're paying a percentage of their assets, not a flat fee, to the manager. If the fund class can beat the market by more than that percentage then it could be worth it, otherwise pick an ETF that has the risk profile you can tolerate. But the first step would be to understand that.

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

#496

Post by airstrike »

adabyron wrote: post #403
airstrike wrote: post #380

Earlier quoted context omitted.

This isn't financial advice, but if they dropped 40-50%, things like consumer staples would go up. In fact, they did this Friday, when everything else melted. The best defensive stock for those situations is WMT, but you can think of other similar names as you reason through the why. That's where I'd go. There are many ETFs such as VDC (Vanguard Consumer Staples). If you don't want to be so defensive, you could go VT…

I think a tricky thing is names like WMT, COST, TJX already have high p/e ratios. You could usually try utilities or energy but those are also high due to AI buildout & Iran. I think gold could make a come back since it's beating down a bit this year. Treasuries or just a reasonable hedge with puts against your holdings may be the best bet. Of course none of this is financial advice & is just open discussion looking…

Yeah, that all makes sense, great points. I agree utilities and energy are already high. As usual, the answer is probably that diversifying a bit to get exposure to all of the above is likely the right move, but that depends on one's appetite for risk and personal views on when the downdraft risk materializes

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

#498

Post by komali2 »

zugi wrote: post #451
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.

I pointed Claude at a read only API account for our ERP, where our accounting happens, and it was pretty useful for helping figure out some historical missing data we left off when we were importing pre-ERP stuff. It did start losing the plot pretty quickly though and get confused about which actor was which (e.g. some of our customers are also our suppliers).

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

#499

Post by fouc »

jstummbillig wrote: post #446
thiisguy wrote: post #417

Earlier quoted context omitted.

The logic isn’t the same. We’ve had plenty of history to judge Alphabet’s financials. It’s less about AI and more about allowing the market to appropriately price the stock after seeing their filings for a period of time.

The financials will be very different when you start doing something entirely different, with all your might.

I think it would be reasonable to consider moving a company making large changes like that into some kind of probationary state, and automatically adjust the weights it has in the index as a result.

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

#500

Post by vagab0nd »

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.

I do enjoy my self driving car :) I've been enjoying it for the last 6 months.

And I will enjoy my trip to Mars, when there are nice hotels there. But it's gonna be a while.

It's a good time to be alive.

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