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Calling it now, this is going to result in a huge scandal. Due to the sheer size of investments based on the index, influencing those opinions will become very

by dcl 6y ago

Calling it now, this is going to result in a huge scandal. Due to the sheer size of investments based on the index, influencing those opinions will become very valuable for certain players.

perl4ever 6y ago
There could be a scandal, but how would it be "huge"? You could throw darts at a list of large companies and weight them with some really dumb rules and get an index that's pretty close to "the market"; that's basically what the Dow is. The difference between even the S&P 500 and a total market index (i.e. all the smaller stocks that exist) is pretty insignificant to returns (and recently bad for them), and I believe the total market funds have become more popular than the traditional S&P 500 ones anyway.
- stevenwliao 6y ago
  The timing of when individual stocks are added or removed from the index seems like valuable information to holders of those stocks.
  - perl4ever 6y ago
    It's one form of possible insider trading among many. In any case, one of my points is, say you want a fund that tracks the stock market, a Vanguard index fund maybe, and you are concerned about their S&P 500 fund being gamed or "front-run" or whatever you want to call it. You don't trust it. They have a "total market" fund with the same 0.03% expenses. Plus, the AUM are the same or a little more, so you don't even have to go against the herd. So if something did happen to the S&P 500 fund, it seems like it would be inconsequential. Who needs it? And people are going to notice if something is wrong because the differences between the S&P 500 fund and the S&P 500 index, or between the fund and the total market, are so small. What you need to worry about is some obscure index fund where everybody is not aware of what it should return. Like, I don't know, USO?
    - stevenwliao 6y ago
      As a holder of S&P 500, it won't look big. As a majority stakeholder in a company that is on the border, it will.

by dcl 6y ago

Calling it now, this is going to result in a huge scandal. Due to the sheer size of investments based on the index, influencing those opinions will become very valuable for certain players.

perl4ever 6y ago

There could be a scandal, but how would it be "huge"? You could throw darts at a list of large companies and weight them with some really dumb rules and get an index that's pretty close to "the market"; that's basically what the Dow is. The difference between even the S&P 500 and a total market index (i.e. all the smaller stocks that exist) is pretty insignificant to returns (and recently bad for them), and I believe the total market funds have become more popular than the traditional S&P 500 ones anyway.

stevenwliao 6y ago
The timing of when individual stocks are added or removed from the index seems like valuable information to holders of those stocks.
- perl4ever 6y ago
  It's one form of possible insider trading among many. In any case, one of my points is, say you want a fund that tracks the stock market, a Vanguard index fund maybe, and you are concerned about their S&P 500 fund being gamed or "front-run" or whatever you want to call it. You don't trust it. They have a "total market" fund with the same 0.03% expenses. Plus, the AUM are the same or a little more, so you don't even have to go against the herd. So if something did happen to the S&P 500 fund, it seems like it would be inconsequential. Who needs it? And people are going to notice if something is wrong because the differences between the S&P 500 fund and the S&P 500 index, or between the fund and the total market, are so small. What you need to worry about is some obscure index fund where everybody is not aware of what it should return. Like, I don't know, USO?
  - stevenwliao 6y ago
    As a holder of S&P 500, it won't look big. As a majority stakeholder in a company that is on the border, it will.