alt Hacker NewsBig relief for me. As a passive investor, I want the indices to follow the same passive strategy they always have, and specifically not make exceptions for specific companies like SpaceX wanted.
Plenty of ways to get exposure to that stock without it going into the indices it is not qualified for.
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This thread should be marked as dupe. But ChrisArchitect seems very picky...
Previously: "SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P" - https://news.ycombinator.com/item?id=48405718
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.
You'll eventually get exposure to it when it gets added in 12 months. Unless there are better profitability criteria. Ultimately it's all about market returns. If other indexes add it and outperform then eventually money will shift to those funds that do better.
When we interviewed a financial planner in 2024, I specifically asked for her take on AI companies. It was a trick question. If she was bullish, we'd have walked. She had a good answer about investing in companies that are established and have stakes in AI companies, such as Microsoft.
I'm greatly relieved that at least one major institution in the markets is showing restraint and exercising caution. I'm also a little surprised at the rationality given what we've seen in the past year or so.
Problem is, most of the other indices have not done what S&P chose for the S&P 500. So if you have money in a NASDAQ, Russell, or FTSE index, you're going to end up with money in SpaceX. Even the S&P Global Index seems likely to include it.
The whole thing is disgusting and the financial sector should be collectively ashamed of themselves.
Russel 1000 will include it in 5 days. Nasdaq in 15 days.
Same here. I was so upset about the prospect of my index funds / retirement savings being force fed 100X revenues investments in large size that I emailed my Representative and both Senators. And to add to the irony, I used ChatGPT to help me write these letters.
I get what you're saying, but I think there's a contradiction between wanting to be a passive index-fund investor and having opinions like that. The core tenet of index investing is that the market knows better than you.
> the same passive strategy they always have
You'll be shocked to know they have changed the inclusion rules a number of times.
I suspect if in 12 months these megacaps are still megacaps, they will revisit the profitability rules. It's hard to have an index with 500 of the largest, most significant companies leaving out companies with trillion dollar market caps.
Agreed. S&P 500 needs to be seriously gatekeeped. We need safer boring companies in there thatbhave been peoven over a long period of time. Nothing against these companies but they are not proven and ready for S&P 500.