4 ms·

I suppose you could look at it that way, although this case it’s the market that made the decision (s&p 500) which then trickled down to the index. You could us

I suppose you could look at it that way, although this case it’s the market that made the decision (s&p 500) which then trickled down to the index. You could use an index like CRSP US Total Market which didn’t have this issue. The index reflects reality, not so much impacted it

CydeWeys 6y ago
The S&P 500 isn't "the market"; it's an index. The actual market is very clearly arguing for the inclusion of Tesla given how it's valued so highly over the vast majority of the stock that the index managers have included in the S&P 500. The S&P 500 purports to be representative of the 500 largest public US corporations, and by excluding Tesla they are absolutely failing to do so. When I buy A&P 500 tracking index funds I am not expecting that the index managers themselves are arbitrarily excluding companies that meet the qualifications. From the S&P's own literature: > To be eligible for S&P 500 index inclusion, a company should be a U.S. company, have a market capitalization of at least USD 8.2 billion, be highly liquid, have a public float of at least 50% of its shares outstanding, and its most recent quarter’s earnings and the sum of its trailing four consecutive quarters’ earnings must be positive. Tesla meets all of these qualifications as near as I can tell. It blows the market cap requirement out of the water and has been profitable for the trailing 4 consecutive quarters.
- robjan 6y ago
  Tesla has multiple share classes which is an exclusion criteria.
  - CydeWeys 6y ago
    Maybe this will be the push for Tesla to fix it then. In the mean time, I would love the option of an index that is literally just "the largest companies", without all these exclusion criteria. I wonder how it would fare against indexes with lots of exclusion criteria.

4 ms·

I suppose you could look at it that way, although this case it’s the market that made the decision (s&p 500) which then trickled down to the index. You could us

by awinder 6y ago

CydeWeys 6y ago
The S&P 500 isn't "the market"; it's an index. The actual market is very clearly arguing for the inclusion of Tesla given how it's valued so highly over the vast majority of the stock that the index managers have included in the S&P 500. The S&P 500 purports to be representative of the 500 largest public US corporations, and by excluding Tesla they are absolutely failing to do so. When I buy A&P 500 tracking index funds I am not expecting that the index managers themselves are arbitrarily excluding companies that meet the qualifications. From the S&P's own literature: > To be eligible for S&P 500 index inclusion, a company should be a U.S. company, have a market capitalization of at least USD 8.2 billion, be highly liquid, have a public float of at least 50% of its shares outstanding, and its most recent quarter’s earnings and the sum of its trailing four consecutive quarters’ earnings must be positive. Tesla meets all of these qualifications as near as I can tell. It blows the market cap requirement out of the water and has been profitable for the trailing 4 consecutive quarters.
- robjan 6y ago
  Tesla has multiple share classes which is an exclusion criteria.
  - CydeWeys 6y ago
    Maybe this will be the push for Tesla to fix it then. In the mean time, I would love the option of an index that is literally just "the largest companies", without all these exclusion criteria. I wonder how it would fare against indexes with lots of exclusion criteria.