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> If you open a government S&P 500 account for everyone with $1,000 at birth that’ll pay their social security cause it like…goes up…wait who’s creating this va

> If you open a government S&P 500 account for everyone with $1,000 at birth that’ll pay their social security cause it like…goes up…wait who’s creating this value again? This is a good point. Some VCs were major proponents of this (and tons of other business people I'm sure), but this is of course just a guaranteed inflow into the largest companies and the companies that think they will be large some day. Yet another way to reallocate public cash to private companies. Another similar example is UBI -- its proof of an economy that is not dynamic. It's a tacit approval and recognition of the fact that "no, you probably won't be able to find a job with dignity that can support you and your family, so the government will pay to make you comfortable while you exist".

PartiallyTyped 1y ago
It is an allocation to the biggest companies at any time. ETFs need to rebalance, increase, decrease shares of a given stock and even evict them. Buying shares on SPY exposes you to the current companies but also any companies that will join. If a company gets evicted, then there is massive drop in their stock pricing as most movement is mechanistic and done by ETFs. Well massive is relative. For example last week we saw quite the drop in pltr after it was removed from russel2000.
- n2d4 1y ago
  FYI this is not true and has been debunked in newer studies; the reason why it seems true is because companies that enter the SP500 tend to enter it because they're doing well which makes its stock go up. If you control for that factor, presence in the SP500 does not significantly affect the stock price. https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr484.pdf https://www.newyorkfed.org/medialibrary/media/research/staff...
  - PartiallyTyped 1y ago
    It’s not about SPY per-se, but about ETFs in general. Addition to spy is likely an addition to many other big volume ETFs. Top stocks also join QQQ which is another highly liquid ETF. Most market volume according to citi is done by ETFs, approximately 80%. When said ETFs rebalance at start and end of any particular day, we end up with big movements, much wider than the sideways chop we observe during the day when movement is mostly performed MMs that deal with hedging or dropping options value. So I don’t think it’s the presence to S&P per se, but presence in big ETFs. Also that paper is from 2012. Market’s a lot different these days. To be clear, I am not saying that getting in there implies stock go brr. I am saying that in the context of the whole comment chain, buying spy exposes one to all companies that will enter or be evicted from the ETF, which then theoretically funds the companies which then produce value, which returns back as dividends or growth of stock. If we look deeper though, buying into ETFs likely means the shares that are exchanged are bought and sold by and to MMs, so a whole lot of value is lost to them.
    - n2d4 1y ago
      That theory would only be true in a market without shorts and derivatives. In the real world, hedge funds and market makers will sell into those pension funds, as the underlying asset value has not actually changed, counterbalancing the effect. Generally, I'd be wary of doing theoretical stock analyses like that. They can be true, but if they're this simple they're almost never true in practice, and if they are then someone is already working on making it not true.
- alecco 1y ago
  Hedge Funds call ETFs, pension funds, etc. "dumb money". I suspect they also feed the finance media narrative stating how on average they are not good at trading.
  - PartiallyTyped 1y ago
    There’s money to be made alright, but I don’t think most retail traders are in the position to do that. Technical analysis might as well be astrology. It treats tickers as isolated when in reality ETFs and growth of any individual stock in an ETF affects the flow in and out of other ETFs. When ETFs purchase stock due to an increase in value, they seek most liquid constituents first, and eventually rebalance. All these create feedback loops. The flow across the ETFs drives 80% of volume. People would have higher performance if they learned about any particular sector, its movement and long term trends. Retail has a lot of flexibility but people focus on trading over days instead of understanding trends and events of tomorrow, next year and the next decade. Retail options “traders” barely understand the mechanics of at all, let alone the disadvantage they are in. They buy overpriced options with absurd premium that tanks during the chop induced by MMs. They don’t understand how MMs move/manipulate(not in the illegal sense)/shape the market to avoid losing money — they wouldn’t be in this position if they lost money. They just copy trades from traders on discord and hope to make some money. ETFs are a great way to make money in terms of risk exactly of their rebalancing mechanics. Everyone doesn’t have to beat the market, just beating inflation and leaving it in the bank is an improvement for the average person. Yes it won’t make people rich tomorrow, but they will be in a better situation next year or the one after than today.
tossandthrow 1y ago
> make you comfortable while you exist I don't think there are many proponents of that type of ubi. The way, at least I, see ubi is absolute subsistence - with a right to earn above that without affecting your subsistence. IMHO something along UBI is needed for a democratized market economy - and I think the Scandinavian countries are the support for this claim.
- pydry 1y ago
  During the depression this was done with a job guarantee. Instead of paying people to sit on their ass they paid people to build stuff like the Lincoln tunnel, which was preferable for them (and even for us, we still use that stuff). UBI is more like the grain dole which Roman Emperors used to temper mass unrest and "prove" their benevolence. It seems to be in vogue among tech moguls who cant distinguish between abject dependence on the Chinese industrial system/systematic underinvestment in infrastructure and all jobs being automated thanks to their glorious genius.
  - tossandthrow 1y ago
    This would sound like a good solution. The main difference from then, however, is that it is difficult to give each man a showel to dig and each woman a kid to care for this time. People need qualifications to operate heavy machinery, know regulations, etc. - we are not in 1934 anymore. As such we also don't need 30% og the population in the farming sector.
    - pydry 1y ago
      In 1934 people were trained on the job. This was as true in the WPA as it was outside. What changed is not the newfound impossibility of doing that, just the reluctance of employers to pay for it and the willingness of the government to indulge their insatiable demand for cheap, pretrained labor.
      - tossandthrow 1y ago
        I find it difficult to believe that the price of training has not gone up. I am not as convinced as you. When training is 7 year degree to achieve some specialization it simply is not for everyone. Also, ubi is not anti work - it is merely the acknowledgement that not everyone have salary worthy things to do. The alternative it havy financialization as in you receive a tip when you bring down you neighbors garbage.
mortsnort 1y ago
S&P 500 companies don't get any inflow of cash when their stock is purchased
- snovymgodym 1y ago
  No, but it makes the stock price appreciate which is even better than a cash inflow for an inside investor since your wealth increases without a taxable event.
- tossandthrow 1y ago
  They can recapitalize? Ofcause a company has huge benits of having expensive stocks.
poorcedural 1y ago
Proof that the USA is the largest exporter of inflation. UBI can not compete with strategic inflation on a global scale.

PartiallyTyped 1y ago

It is an allocation to the biggest companies at any time. ETFs need to rebalance, increase, decrease shares of a given stock and even evict them. Buying shares on SPY exposes you to the current companies but also any companies that will join. If a company gets evicted, then there is massive drop in their stock pricing as most movement is mechanistic and done by ETFs. Well massive is relative. For example last week we saw quite the drop in pltr after it was removed from russel2000.

n2d4 1y ago
FYI this is not true and has been debunked in newer studies; the reason why it seems true is because companies that enter the SP500 tend to enter it because they're doing well which makes its stock go up. If you control for that factor, presence in the SP500 does not significantly affect the stock price. https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr484.pdf https://www.newyorkfed.org/medialibrary/media/research/staff...
- PartiallyTyped 1y ago
  It’s not about SPY per-se, but about ETFs in general. Addition to spy is likely an addition to many other big volume ETFs. Top stocks also join QQQ which is another highly liquid ETF. Most market volume according to citi is done by ETFs, approximately 80%. When said ETFs rebalance at start and end of any particular day, we end up with big movements, much wider than the sideways chop we observe during the day when movement is mostly performed MMs that deal with hedging or dropping options value. So I don’t think it’s the presence to S&P per se, but presence in big ETFs. Also that paper is from 2012. Market’s a lot different these days. To be clear, I am not saying that getting in there implies stock go brr. I am saying that in the context of the whole comment chain, buying spy exposes one to all companies that will enter or be evicted from the ETF, which then theoretically funds the companies which then produce value, which returns back as dividends or growth of stock. If we look deeper though, buying into ETFs likely means the shares that are exchanged are bought and sold by and to MMs, so a whole lot of value is lost to them.
  - n2d4 1y ago
    That theory would only be true in a market without shorts and derivatives. In the real world, hedge funds and market makers will sell into those pension funds, as the underlying asset value has not actually changed, counterbalancing the effect. Generally, I'd be wary of doing theoretical stock analyses like that. They can be true, but if they're this simple they're almost never true in practice, and if they are then someone is already working on making it not true.
alecco 1y ago
Hedge Funds call ETFs, pension funds, etc. "dumb money". I suspect they also feed the finance media narrative stating how on average they are not good at trading.
- PartiallyTyped 1y ago
  There’s money to be made alright, but I don’t think most retail traders are in the position to do that. Technical analysis might as well be astrology. It treats tickers as isolated when in reality ETFs and growth of any individual stock in an ETF affects the flow in and out of other ETFs. When ETFs purchase stock due to an increase in value, they seek most liquid constituents first, and eventually rebalance. All these create feedback loops. The flow across the ETFs drives 80% of volume. People would have higher performance if they learned about any particular sector, its movement and long term trends. Retail has a lot of flexibility but people focus on trading over days instead of understanding trends and events of tomorrow, next year and the next decade. Retail options “traders” barely understand the mechanics of at all, let alone the disadvantage they are in. They buy overpriced options with absurd premium that tanks during the chop induced by MMs. They don’t understand how MMs move/manipulate(not in the illegal sense)/shape the market to avoid losing money — they wouldn’t be in this position if they lost money. They just copy trades from traders on discord and hope to make some money. ETFs are a great way to make money in terms of risk exactly of their rebalancing mechanics. Everyone doesn’t have to beat the market, just beating inflation and leaving it in the bank is an improvement for the average person. Yes it won’t make people rich tomorrow, but they will be in a better situation next year or the one after than today.

tossandthrow 1y ago

> make you comfortable while you exist I don't think there are many proponents of that type of ubi. The way, at least I, see ubi is absolute subsistence - with a right to earn above that without affecting your subsistence. IMHO something along UBI is needed for a democratized market economy - and I think the Scandinavian countries are the support for this claim.

pydry 1y ago
During the depression this was done with a job guarantee. Instead of paying people to sit on their ass they paid people to build stuff like the Lincoln tunnel, which was preferable for them (and even for us, we still use that stuff). UBI is more like the grain dole which Roman Emperors used to temper mass unrest and "prove" their benevolence. It seems to be in vogue among tech moguls who cant distinguish between abject dependence on the Chinese industrial system/systematic underinvestment in infrastructure and all jobs being automated thanks to their glorious genius.
- tossandthrow 1y ago
  This would sound like a good solution. The main difference from then, however, is that it is difficult to give each man a showel to dig and each woman a kid to care for this time. People need qualifications to operate heavy machinery, know regulations, etc. - we are not in 1934 anymore. As such we also don't need 30% og the population in the farming sector.
  - pydry 1y ago
    In 1934 people were trained on the job. This was as true in the WPA as it was outside. What changed is not the newfound impossibility of doing that, just the reluctance of employers to pay for it and the willingness of the government to indulge their insatiable demand for cheap, pretrained labor.
    - tossandthrow 1y ago
      I find it difficult to believe that the price of training has not gone up. I am not as convinced as you. When training is 7 year degree to achieve some specialization it simply is not for everyone. Also, ubi is not anti work - it is merely the acknowledgement that not everyone have salary worthy things to do. The alternative it havy financialization as in you receive a tip when you bring down you neighbors garbage.

mortsnort 1y ago

S&P 500 companies don't get any inflow of cash when their stock is purchased

snovymgodym 1y ago
No, but it makes the stock price appreciate which is even better than a cash inflow for an inside investor since your wealth increases without a taxable event.
tossandthrow 1y ago
They can recapitalize? Ofcause a company has huge benits of having expensive stocks.

poorcedural 1y ago

Proof that the USA is the largest exporter of inflation. UBI can not compete with strategic inflation on a global scale.