Earlier quoted context omitted.
You're forgetting that whenever the incentives lead to bad places it isn't True Capitalism (tm).
True capitalism has never been tried. This right now is crony capitalism.
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SpaceX bond worth 10% less than issue price – heading for junk bond status
251–260 of 638 posts
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#252Earlier quoted context omitted.
The market “settling on a price” includes the actions of short sellers.
Do I need to be able to short bananas for the market to settle on the price of a banana?
If you're confident the price of bananas will fall tomorrow you absolutely can sign a contract to deliver bananas next week at the current price and then buy them when the price drops...
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#253Earlier quoted context omitted.
Except that it's not clear really that lenders will be able to judge on that basis alone. SpaceX is a different kind of unicorn: it's a government contractor run by the richest man in the world who controls a media echo chamber and gets people elected. That article compares them to Oracle. Who are, as it goes, pretty similar: run by rich people with a media empire who have their teeth deep in government systems. Thes…
The bond price is an outcome of lenders judging, not a cause. Lenders have already judged.
Of course. But you have a bond buyer who can put their thumb on the scale, and has shown willingness to do so. That buyer also tried to interfere in (succeeded in interfering in) the business of law firms that worked for anti-Trump causes, has directly interfered in the renewable energy market to benefit its backers, etc.
What is to say that SpaceX and Oracle won't get these benefits? (Government buying bonds, trashing ratings agencies, leaning on banks to lend etc.)
Nothing obvious, I posit. So what is the value of a bond when a government is increasingly likely to manipulate the market for it?
And that is putting aside the second order of government interference: foreign governments putting their thumbs on the scale with their own investment funds and influenceable buyers, to buy influence over a government that favours these firms.
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#254Earlier quoted context omitted.
Literally the index. If you track the NASDAQ as part of your index you must obey it's inclusion rules.
Contrary to (apparently) popular opinion, index funds are not people. So, who is being forced to buy that index?
Turns out people (and institutions like municipalities and pension funds) sometimes buy index funds before SpaceX enters the NASDAQ 100, and changing their policies over a single event would be a great effort and expense, and set a bad precedent. Sounds crazy, but it's true.
Nobody has any idea what point you're trying to make, and the fact that you're repeating yourself and not being clearer makes everyone suspect that you don't have any idea either.
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#255Earlier quoted context omitted.
Except that it's not clear really that lenders will be able to judge on that basis alone. SpaceX is a different kind of unicorn: it's a government contractor run by the richest man in the world who controls a media echo chamber and gets people elected. That article compares them to Oracle. Who are, as it goes, pretty similar: run by rich people with a media empire who have their teeth deep in government systems. Thes…
He's only the "richest" man in the world because of the inflated valuations of his companies. At some point the market looks like a dog chasing its own tail: Q: Why is this stock so valuable? A: Duh, because Musk is worth a kajillion dollars and everything he touches is gold! Q: Why is Musk worth a kajillion dollars? A: Because he holds so many shares of extremely valuable companies, silly!
There is this, but he is also a quasi-government figure. As Trump weakens he will reappear in that sphere.
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#256Earlier quoted context omitted.
Literally the index. If you track the NASDAQ as part of your index you must obey it's inclusion rules.
Contrary to (apparently) popular opinion, index funds are not people. So, who is being forced to buy that index?
A lot of employer pensions will have limited fund options. (At least in the UK, maybe the US works differently.)
Quite likely that the only sensible one for most people (~global equities) will track S&P 500 internally. So essentially employees are being forced to hold whatever the index includes.
Hopefully it's less of a problem with Nasdaq, but it was a real worry.
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#257Earlier quoted context omitted.
quick search: https://www.justetf.com/uk/search.html?search=ETFS&assetClas...
ok, who is forced to buy these ETFs? These are all products that people and funds can choose to buy or not buy.
leaving the word 'forced' aside (purposefully), pension funds, 401k holders, and many passive investors end up buying these things. you're right that no one is "forcing" them, but people who try to invest responsibly with little control over the day-to-day which is most people place trust in the institutions who do that investing for them.
I don't think that the claim of "the Nasdaq is misusing their institutional trust" is a controversial claim. Moreover, one of the things that people choose when they (401k, pension funds, passive investors) is institutional mechanisms that prevent potentially mispriced items from entering their portfolios.
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#258Earlier quoted context omitted.
Isn’t that how capitalism works in general? Edit: thanks for the downvotes. Defenders of capitalism unite!!! lol. Free market right?
Can this be called "Capitalism" when SpaceX is now a public company?
The word "public" doesn't mean that in this case. It's still a private company.
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#259Anyone still buying anything the right-arm-raising guy is controlling is out of his or her mind.
Re: SpaceX bond worth 10% less than issue price – heading for junk bond status
#260Earlier quoted context omitted.
Index funds, for starters.
Contrary to (apparently) popular opinion, index funds are not people.
Correct. Index funds are owned by people. For example, I have invested a large chunk of my retirement savings in an S&P 500 indexed fund (as many, many other people do). Whatever stocks the S&P 500 list, are what I end up owning; if I don't want to own one of those, I have to either roll that money into a different fund (which IIRC has limits, can't do that too often without tax consequences) or take the money out (and pay a tax penalty for withdrawing it before retirement).
So whether the index funds do or don't buy a certain stock has direct implications for real, non-millionaire, people.