alt Hacker NewsKeeping newly-publicly listed companies off an index keeps outliers from screwing with the index. It's no secret that companies that have recently gone public tend to be considerably more volatile than companies that have been public for a while.
I see a lot of comments saying things to this effect: "S&P 500 is just a metric/benchmark, not a fund, so it should consider the whole market even if that includes a newly-listed but very large company." And yeah, the S&P 500 is an index, not a fund.
But you know what is a fund? SPY, VOO, IVV, FXAIX, and loads of others. Regardless of what institution(s) manage your retirement accounts, you are almost certainly benefitting from the S&P 500 filtering out post-IPO fuckery.
The irony of all this drama is probably 90% of 401ks (retirement accounts) are in a target date fund since that's the default for most/all. When you get your 401k it figures out when you're going to be 65 and then drops you in a fund that gives you the highest and safest return at the time you hit 65. Target date funds contain all kinds of other funds and are actively managed and drift towards bonds (historically safer). As you get closer to retirement you have less time to make up a downturn therefore the risk level gets automatically turned down.
So the whole argument of taking advantage of retirement accounts with these rule changes kind of falls apart. If you're close to retirement these funds want nothing to do with equities let alone high risk IPOs. If something happens, like a rule change to a tracked index, and all of a sudden the risk goes way up then the fund managers will make an adjustment to the portfolio that gets the risk back to where it was. Further, the SP500 deciding not to change rules doesn't do anything really anyway. If you're far from retirement your target date fund is going to get exposure to these IPOs because you can tolerate the risk and therefore maybe reap the reward.
If you're actively managing your 401k and have everything in say a total market fund or some other investment then you're well enough aware and educated to switch funds as you please. I don't think those people are going to be impacted either because they will/should just switch to a fund they like. If they are negatively impacted then they made the wrong decision.
If you have your own brokerage account and you're invested in a fund tracking an index you no longer like, well, then you need to sell and buy something you do like. I still don't see the reason for all the drama :shrug:
What i think is really happening is people are having a very emotional response to SpaceX because of Elon Musk and the idea of him becoming a trillionaire and Anthropic/OpenAI because of AI and the risk to labor.