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Nasdaq's Shame

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Re: Nasdaq's Shame

#131

Post by bryanlarsen »

infinitewars wrote: post #88
bryanlarsen wrote: post #46

Earlier quoted context omitted.

Yes, when SpaceX gets added to the index, it's going to skyrocket for just that reason. The other reason why SpaceX stock is going to skyrocket is because of the "infinite potential". After all, Elon is going to be God-Emperor of Mars, and how much is a piece of that worth? The OP knows this and wants a window to profit from this squeeze. For the general public index owners, the sooner it's added to the index the bet…

SpaceX has always been a about convincing private industry to fund the militarization of space. See https://en.wikipedia.org/wiki/Golden_Dome_(missile_defense_s... Mars is a thin cover story to get the engineers to feed the War machine. "National security" / nuclear threat is a great excuse to get politicians to sell out the country. How about we focus on global security?

I thought it was obvious that "God Emporeror of Mars" was a satirical answer. There are a whole bunch of new markets that cheap access to space open up. Like Bezos' dream of in-space manufacturing. Or Musk's dream of data centres in space. Or power gen in space. Or the "cis-lunar economy". Or space tourism. Or He3 on the moon. People will buy SpaceX stock for the potential, even if that potential is pretty much worthless and the chance of SpaceX capturing the gains rather than some other company is fairly low.

"National Security" is just one more in a big list.

Re: Nasdaq's Shame

#132

Post by bagacrap »

lotsofpulp wrote: post #128
bagacrap wrote: post #66

Earlier quoted context omitted.

To be fair, QQQ is not really an index fund. Unless you think that I can make up whatever arbitrary list of stocks I feel like, and call it an index, and create an ETF that tracks it, and still call that an index fund. Vanguard is probably the most principled when it comes to passive index tracking, and they do not have an ETF that tracks the NASDAQ 100 (or any fund that focuses on a single stock exchange for some in…

>Unless you think that I can make up whatever arbitrary list of stocks I feel like, and call it an index, and create an ETF that tracks it, and still call that an index fund. Yes, you can. Whether or not the index makes sense for whatever one's investing goals may be is irrelevant.

Then what does "index" even mean? Is Cathy Woods an index?

Re: Nasdaq's Shame

#133

Post by bagacrap »

nighthawk454 wrote: post #79
bagacrap wrote: post #72

Earlier quoted context omitted.

The top 3 most popular index fund ETFs track S&P500, which doesn't really pull this kind of shenanigan. Only QQQ tracks the NASDAQ 100 and it's in 5th place by assets under management. You should probably read a book about index investing if you are going to invest.

Yeah, but the S&P500 is hugely concentrated in MAG7, which are all Nasdaq listed. So when they all get sold to buy SpaceX, you can bet your butt something's gonna happen to a S&P500 ETF.

SPY is somewhat concentrated in mag7 (or the other 93 stocks in QQQ), but only a small percent of mag 7 are owned via QQQ, which has 400B aum. (Mag 7 is 19T.)

The bottom line is all this fuckery is a tiny blip for most investors. It's far more concerning to me the societal harm that will come from further enriching Elon.

Re: Nasdaq's Shame

#134

Post by bagacrap »

Retric wrote: post #87
bagacrap wrote: post #71

Earlier quoted context omitted.

Shorting is really not that straightforward. It is a avery advanced topic because it mandates the use of leverage. Many (most) investors are long-only, especially the ones being taken advantage of here.

> especially the ones being taken advantage of here. This is a great argument why buying an index is a poor choice for a long term investor. You can avoid a great deal of shenanigans by randomly purchasing stocks and holding them for 50 years. Even a 0.02% annual fee costs you 1% of your long term returns over that timescale. But there’s tradeoffs to everything.

Index investing is a great choice for a long term investor who cares about simplicity, which should be the vast majority of them. Actually the best thing about holding individual stocks is probably the increased opportunities for TLH, but the nightmare of holding and managing hundreds of securities in your account is very seldom worth what you save on fees or deferred taxes.

Re: Nasdaq's Shame

#135

Post by throwaway2037 » 

    > Assume SpaceX IPOs at a $1.75 trillion valuation.
Clickbait or ragebait? I'm not really sure which one is appropriate here. Or maybe both?

Like Aramco before their IPO with wild post-IPO valuation claims, I am sure that SpaceX will IPO with a market cap far below this estimate.

Also, will the NASDAQ 100 index really fall apart if they make exception for the richest IPO valuation in US history? No. There, I said it out loud. We also survived the Alibaba IPO, and their financial structure is infinitely more shady/unreliable! Ditto for OpenAI and NASDAQ 100, which will follow shortly after.

The "problem" of a single org deciding the composition of stock indices has been argued ad nauseam for the last two decades in financial media. A lot of sweat (and pearl clutching) for little gain/clarity!

Re: Nasdaq's Shame

#136

Post by throwaway2037 »

super256 wrote: post #116
Veserv wrote: post #41

To explain the mechanism simply. Suppose you had a index of 100 companys each with a market cap of 1 G$ for a total of 100 G$. You have passive investors owning 20 G$ of that index, amounting to 20% of the total, 20% of each company, and 200 M$ per company. You then rotate out a company for a new one also worth 1 G$. The index is still 100 G$, but to match the index you are contractually required to sell your 20% own…

This is wrong in multiple ways. First: 5x5 is 25, not 20. So it's 25% rather than 20% Second: they only have to buy the 25% of the listed shares. To take your 1 Trillion example: if SpaceX has a total market cap of 1T, but only 500b get listed on NASDAQ, and the free float is 5%, the index will weigh SpaceX at 25% of the listed shares, which means it will be weighted at 500 * 0.25 = 125b. And also note that index ETF…

    > also note that index ETFs have tracking errors all the time (that's why arbitrage traders still have business!)
I call bullshit. We are talking about tracking errors in single basis points for well structured ETFs with good liquidity. This spread is still (at least!) 10x less than what a normie retail trader could achieve on their own -- trading the basket manually.

Re: Nasdaq's Shame

#137

Post by throwaway2037 »

bryanlarsen wrote: post #46
Veserv wrote: post #41

To explain the mechanism simply. Suppose you had a index of 100 companys each with a market cap of 1 G$ for a total of 100 G$. You have passive investors owning 20 G$ of that index, amounting to 20% of the total, 20% of each company, and 200 M$ per company. You then rotate out a company for a new one also worth 1 G$. The index is still 100 G$, but to match the index you are contractually required to sell your 20% own…

Yes, when SpaceX gets added to the index, it's going to skyrocket for just that reason. The other reason why SpaceX stock is going to skyrocket is because of the "infinite potential". After all, Elon is going to be God-Emperor of Mars, and how much is a piece of that worth? The OP knows this and wants a window to profit from this squeeze. For the general public index owners, the sooner it's added to the index the bet…

How will a colony on Mars be profitable?

Re: Nasdaq's Shame

#138

Post by infinitewars »

bryanlarsen wrote: post #131
infinitewars wrote: post #88

Earlier quoted context omitted.

SpaceX has always been a about convincing private industry to fund the militarization of space. See https://en.wikipedia.org/wiki/Golden_Dome_(missile_defense_s... Mars is a thin cover story to get the engineers to feed the War machine. "National security" / nuclear threat is a great excuse to get politicians to sell out the country. How about we focus on global security?

I thought it was obvious that "God Emporeror of Mars" was a satirical answer. There are a whole bunch of new markets that cheap access to space open up. Like Bezos' dream of in-space manufacturing. Or Musk's dream of data centres in space. Or power gen in space. Or the "cis-lunar economy". Or space tourism. Or He3 on the moon. People will buy SpaceX stock for the potential, even if that potential is pretty much worth…

No, those other "dreams" were either developed or refined by, https://en.wikipedia.org/wiki/Citizens%27_Advisory_Council_o... as pretexts to pursue a space militarization agenda. The history is clear but the New Space propaganda is being fed to the younger generation.

Re: Nasdaq's Shame

#139

Post by super256 »

throwaway2037 wrote: post #136
super256 wrote: post #116

Earlier quoted context omitted.

This is wrong in multiple ways. First: 5x5 is 25, not 20. So it's 25% rather than 20% Second: they only have to buy the 25% of the listed shares. To take your 1 Trillion example: if SpaceX has a total market cap of 1T, but only 500b get listed on NASDAQ, and the free float is 5%, the index will weigh SpaceX at 25% of the listed shares, which means it will be weighted at 500 * 0.25 = 125b. And also note that index ETF…

> also note that index ETFs have tracking errors all the time (that's why arbitrage traders still have business!) I call bullshit. We are talking about tracking errors in single basis points for well structured ETFs with good liquidity. This spread is still (at least!) 10x less than what a normie retail trader could achieve on their own -- trading the basket manually.

I didn't mention retail traders anywhere. With arbitrage traders I mean those companies who do hft all the time and are directly connected to exchanges. They still do business.

Re: Nasdaq's Shame

#140

Post by throwaway2037 »

riffraff wrote: post #96
twothreeone wrote: post #90

Earlier quoted context omitted.

> To get the remaining 15%, which they are contractually obligated to acquire, they must purchase from the founder. As they are in violation of their contract if they fail to acquire the remaining 15%, the founder now has complete control to dictate any price they want. I can't imagine "any price they want" is quite right here. At the very least, shouldn't we expect underwriters and other stakeholders (in this case N…

Index funds have a variety of ways to replicate the index beyond physical replication, including options, buying "similar things", sampling etc.. So yeah, they don't really need to stick to 100% of the presented issue.

Such a bold claim. Since we are talking about stock indices here... Can you provide a well known (liquid) non-leveraged example that does not directly trade the underlying stocks? It would probably make the create/redeem process more complex for market makers.
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