51–60 of 181 posts
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…
Earlier quoted context omitted.
VIFAX?
I think it’d be a rinse and repeat of the line of thinking for VT but more exposure than VT. From VIFAX fund’s description on vanguard: > The fund offers exposure to 500 of the largest U.S. companies
>The Global Equity Index Management team applies disciplined portfolio construction and efficient trading techniques designed to help minimize tracking error and maintain close alignment with benchmark characteristics [of S&P 500].
So given that this only affects NASDAQ i'm guessing they aren't affected? And even if S&p 500 started to play the same games, why can't their supposedly disciplined "Global Equity Index Management team" simply opt not to play along with these shenanigans? Or if they simply do mechanically track the s&p 500, what exactly is the "management fee" paying for?
SpaceX is looking at an IPO in the range of $1.75T on revenues of ~$16B. That's ~100x revenue (let's ignore the net for the moment).
How have recent IPOs done when they went out in the neighborhood of 100x revenue?
Earlier quoted context omitted.
I think it’d be a rinse and repeat of the line of thinking for VT but more exposure than VT. From VIFAX fund’s description on vanguard: > The fund offers exposure to 500 of the largest U.S. companies
Based on the comment from [1] it seems like the issue with nasdaq is that anyone tracking it is contractually obligated to include spacex? What about for other funds? VIFAX description says >The Global Equity Index Management team applies disciplined portfolio construction and efficient trading techniques designed to help minimize tracking error and maintain close alignment with benchmark characteristics [of S&P 500]…
Obligatory not financial advice, I’m not an expert, don’t make any financial decisions based on hacker news comments, etc
I’m trying to understand the mechanics here. I get that SpaceX and Nasdaq are in cahoots to get SpaceX bundled with a bunch of other stocks (and that bundle is called QQQ?) But why must retail investors hold this bundle? If I’m holding now, I can sell it and buy a different bundle right? And if I’m not holding it now, I can just continue not to buy it after SpaceX gets included.
However, QQQ had a really good last 15 years and lots of investors hold it because they are chasing returns and because the marketing worked. (The managers of QQQ are legally obligated to spend X% of the fees collected on advertising the ETF, ha ha ha.)
Earlier quoted context omitted.
I learned: sell all my Nasdaq etfs prior to June.
The problem is that it's very hard to avoid if you have a pension plan, and millions of Americans will subsidize Elon Musk without knowing. This is really messed up.
Does this only affect money invested after June 15th, or does this also devalues money invested before this date? If you don't invest anymore money in the index during the interim rebalancing period refered to by the author, then one should be alright. Right? It's really expensive to get all your marbles out, I'd rather not do it if I don't have to.
But do take this moment to realize QQQ never made sense to invest in, and put your future dollars somewhere else. There are plenty of funds that overweight large cap tech but track an index that doesn't care which exchange the stock is listed on.
So sounds like this will be a great short candidate after the index re-weighting.
Either way, no, high frequency trading firms are going to beat you to the punch. And shorting elons other company, just because it's over valued by traditional metrics, didn't work out that great for most traders.
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…
Who is contractually obligated to buy?