alt Hacker News> 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.
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My personal photography blogging business has a market cap of a trillion dollars too.
I have 1 trillion shares, and I sold 1 to a mate for a dollar.
Total company revenue is like 50 bucks a month and profits are nil.
Can I be in the S&P 500 too?
It’s a list of the 500 largest profitable companies. Gotta make some bottom line $$$ to be included. At least that’s how it’s worked in the past.
Seasoning and profitability rules are why S&P does not have as steep of a drawdown or as long as a recovery as Nasdaq over the last 30 years of market performance.
The S&P recovered from Dotcom bottom in ~7 years while the Nasdaq-100 took 15 years. Likewise Nasdaq took 3.5 years and the AI hype to recover back to its COVID highs in 2024 while S&P had the same recovery in about 2 years.
This is the downside to Nasdaq having higher returns in tech bull markets.
So the indices have a very different volatility profile by design, we should be happy to have the choice rather than have them all converge to the same product.