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Does the GAAP accounting matter if everyone passively buys shares due to the new fast entry rules, which corruptly will force us all to buy into these companies

Does the GAAP accounting matter if everyone passively buys shares due to the new fast entry rules, which corruptly will force us all to buy into these companies? The fundamentals and true value seem less relevant than ever: https://www.benzinga.com/markets/tech/26/03/51248353/michael-burry-flags-structural-manipulation-risk-in-nasdaq-rules-ahead-of-potential-spacex-listing https://www.benzinga.com/markets/tech/26/03/51248353/michael...

manquer 7mo ago
Diluting the index entry rules, only devalues the index utility. When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety. More likely than not, most of us are already holding stock in these companies one way or another. All the Mag 7 hold a major chunk of OAI and Anthropic stock anyway, slower entry does not make it less risky for us. Even if the big tech companies did not hold any stock, they are still the biggest vendors and their own order books is hugely impacted by the AI demand from these two ( and others in this space), either way we are all in this together.
- qotgalaxy 7mo ago
  [dead]
- minraws 7mo ago
  I personally find this is the correct solution, since indexes are over-inflated either way, this brings much needed sanity to the index. Your index is now worth much more or much less based on how you view the AI bubble and you are forced to understand and correct your forward looking investments accordingly. Passive investments are good, but if taken too far as they clearly have been in the last decade they become a scam. Everyone is SIPing into it, and there is infinite liquidity. Until one big whale finally decides they are booking it, then all hell will break loose on the same damn day.
- chronc6393 7mo ago
  > When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety Doubt it. The world does not allow perfect competition.
  - JumpCrisscross 7mo ago
    > world does not allow perfect competition What does this have to do with anything? Plenty of asset managers construct indices to save fees.
- ml-anon 7mo ago
  lol imagine someone believing in the invisible hand of the free market in 2026
  - manquer 7mo ago
    In the short term there are distortions and inefficiencies. It may feel like free market is done . However in the long term, economics usually finds the most efficient way. Maintaining inefficient structures like tariffs or monopolies becomes more and more expensive and eventually untenable and disruptions will occur.
    - farialima 7mo ago
      In the long term we are all dead. (Keynes) Really feels like 1928
gloryjulio 7mo ago
Yes gaap absolutely matters. You can just choose not to play the accounting game, and only choose the ones that actually gaap viable as investment opportunities. For example mag7 - tesla are all relatively cheap when they dip. Some times the best play is just not to play. If you think they are too risky, walk away. There are enough good oppotunities
- throwaway2037 7mo ago
  > mag7 (minus) tesla are all relatively cheap when they dip I asked ChatGPT for a list of Magnificent 7 stocks and their most recent price to earnings (PE) ratios. Company Ticker P/E Ratio Apple Inc. AAPL ~33 Microsoft Corporation MSFT ~25 Alphabet Inc. GOOGL ~29 Amazon.com Inc. AMZN ~30 NVIDIA Corporation NVDA ~38 Meta Platforms Inc. META ~28 Tesla Inc. TSLA ~378 In the last 50 years, I think the median PE ratio for S&P 500 index is about 15. Seven and below is considered rock bottom, and 30 and above is very high. These PE ratios look pretty damn high to me. How much do these names need to "dip" for you to consider them cheap?
  - gloryjulio 7mo ago
    There are a few things to consider if you are in the investment space: - Growth rate: you can't compare them to the average single digit growth companies or dividend focused companies. Most of these tech companies revenue are still growing at double digit with good moat. Pe is a good measure but it's not absolute. If you believe they sustain their growth then it's a good bet. And you can choose not to buy in their growth stories too. At the end of the day investment is about judgement call - History benchmark: some of their pe is at historical low. So they are actually cheaper than before. - Pe ttm and forward pe: how much pe ttm are they at? how much forward pe are they projecting? If forward pe is significantly lower, that means the current analysts consensus is that they will grow in future - Pe is the a number but it's not everything. You need to consider multiple things to decide if that's undervalued for you. It's highly subjective as different interpretations are common. - This post is about if you want to play the gaap game with private tech companies. My point is that there are still many public companies that are cheap at certain point. You just need to be patient and be willing to research and wait. For example, meta at around 500 was a buy for me, but since then it has rebounded it's still good but not as undervalued as a few days ago
throwaway2037 7mo ago
For other readers, I want to add some context here. NASDAQ is pondering whether or not to change their NASDAQ 100 index membership rules for IPOs. Currently, there is a three month waiting rule for IPOs. They are proposing (not sure if passed/agree/completed yet) to remove this waiting rule for IPOs. Real question: What is the real impact of this rule change? To me, it seems so minor. Three months is just a blip in time for any long term investor. > which corruptly will force us all to buy into these companies Why is this "corrupt"? That term makes no sense here. Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. You can trade the basket yourself minus the names that you don't like. Finally, I would say that S&P 500 index is far more important than NASDAQ 100. To join the S&P 500 index, the name must be profitable for the most recent year. (four quarters). Recall that Uber IPO'd in 2019, but was not profitable until 2023. OpenAI probably will not be profitable when it goes public; thus, it will not join the S&P 500 immediately. I think the bigger story is SpaceX. It will likely IPO very close to a 1T USD market cap (with a small float: ~10%). And, thanks to StarLink, I assume that SpaceX is now wildly profitable.
- Fripplebubby 7mo ago
  > Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. Isn't the idea with the indexes that they allow you to intentionally not take an activist position in the market? The exposure is not tied to any underlying market hypothesis. In other words, if we make people form a market hypothesis in order to decide whether or not to hold this index, it has failed in its purpose.
- nixon_why69 7mo ago
  The "corruption" allegation is that for, yes, SpaceX, index funds will effectively be "forced" to buy in right away at their IPO price, rather than seeing where they settle before getting the money in. Given that most people have most of their money in index funds, it's sort-of an automatic buy and raises some hackles about a fixed game. Saying "you can trade the basket yourself minus the names you don't like" is not a real counterargument. Most of us are not going to do that, I'm not going to do that and I'm writing this post right now. John Doe is certainly not doing that.
master-lincoln 7mo ago
what would force you? I guess if you are a greedy bastard you might feel that way...

manquer 7mo ago

Diluting the index entry rules, only devalues the index utility. When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety. More likely than not, most of us are already holding stock in these companies one way or another. All the Mag 7 hold a major chunk of OAI and Anthropic stock anyway, slower entry does not make it less risky for us. Even if the big tech companies did not hold any stock, they are still the biggest vendors and their own order books is hugely impacted by the AI demand from these two ( and others in this space), either way we are all in this together.

qotgalaxy 7mo ago
[dead]
minraws 7mo ago
I personally find this is the correct solution, since indexes are over-inflated either way, this brings much needed sanity to the index. Your index is now worth much more or much less based on how you view the AI bubble and you are forced to understand and correct your forward looking investments accordingly. Passive investments are good, but if taken too far as they clearly have been in the last decade they become a scam. Everyone is SIPing into it, and there is infinite liquidity. Until one big whale finally decides they are booking it, then all hell will break loose on the same damn day.
chronc6393 7mo ago
> When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety Doubt it. The world does not allow perfect competition.
- JumpCrisscross 7mo ago
  > world does not allow perfect competition What does this have to do with anything? Plenty of asset managers construct indices to save fees.
ml-anon 7mo ago
lol imagine someone believing in the invisible hand of the free market in 2026
- manquer 7mo ago
  In the short term there are distortions and inefficiencies. It may feel like free market is done . However in the long term, economics usually finds the most efficient way. Maintaining inefficient structures like tariffs or monopolies becomes more and more expensive and eventually untenable and disruptions will occur.
  - farialima 7mo ago
    In the long term we are all dead. (Keynes) Really feels like 1928

gloryjulio 7mo ago

Yes gaap absolutely matters. You can just choose not to play the accounting game, and only choose the ones that actually gaap viable as investment opportunities. For example mag7 - tesla are all relatively cheap when they dip. Some times the best play is just not to play. If you think they are too risky, walk away. There are enough good oppotunities

throwaway2037 7mo ago
> mag7 (minus) tesla are all relatively cheap when they dip I asked ChatGPT for a list of Magnificent 7 stocks and their most recent price to earnings (PE) ratios. Company Ticker P/E Ratio Apple Inc. AAPL ~33 Microsoft Corporation MSFT ~25 Alphabet Inc. GOOGL ~29 Amazon.com Inc. AMZN ~30 NVIDIA Corporation NVDA ~38 Meta Platforms Inc. META ~28 Tesla Inc. TSLA ~378 In the last 50 years, I think the median PE ratio for S&P 500 index is about 15. Seven and below is considered rock bottom, and 30 and above is very high. These PE ratios look pretty damn high to me. How much do these names need to "dip" for you to consider them cheap?
- gloryjulio 7mo ago
  There are a few things to consider if you are in the investment space: - Growth rate: you can't compare them to the average single digit growth companies or dividend focused companies. Most of these tech companies revenue are still growing at double digit with good moat. Pe is a good measure but it's not absolute. If you believe they sustain their growth then it's a good bet. And you can choose not to buy in their growth stories too. At the end of the day investment is about judgement call - History benchmark: some of their pe is at historical low. So they are actually cheaper than before. - Pe ttm and forward pe: how much pe ttm are they at? how much forward pe are they projecting? If forward pe is significantly lower, that means the current analysts consensus is that they will grow in future - Pe is the a number but it's not everything. You need to consider multiple things to decide if that's undervalued for you. It's highly subjective as different interpretations are common. - This post is about if you want to play the gaap game with private tech companies. My point is that there are still many public companies that are cheap at certain point. You just need to be patient and be willing to research and wait. For example, meta at around 500 was a buy for me, but since then it has rebounded it's still good but not as undervalued as a few days ago

throwaway2037 7mo ago

For other readers, I want to add some context here. NASDAQ is pondering whether or not to change their NASDAQ 100 index membership rules for IPOs. Currently, there is a three month waiting rule for IPOs. They are proposing (not sure if passed/agree/completed yet) to remove this waiting rule for IPOs. Real question: What is the real impact of this rule change? To me, it seems so minor. Three months is just a blip in time for any long term investor. > which corruptly will force us all to buy into these companies Why is this "corrupt"? That term makes no sense here. Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. You can trade the basket yourself minus the names that you don't like. Finally, I would say that S&P 500 index is far more important than NASDAQ 100. To join the S&P 500 index, the name must be profitable for the most recent year. (four quarters). Recall that Uber IPO'd in 2019, but was not profitable until 2023. OpenAI probably will not be profitable when it goes public; thus, it will not join the S&P 500 immediately. I think the bigger story is SpaceX. It will likely IPO very close to a 1T USD market cap (with a small float: ~10%). And, thanks to StarLink, I assume that SpaceX is now wildly profitable.

Fripplebubby 7mo ago
> Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. Isn't the idea with the indexes that they allow you to intentionally not take an activist position in the market? The exposure is not tied to any underlying market hypothesis. In other words, if we make people form a market hypothesis in order to decide whether or not to hold this index, it has failed in its purpose.
nixon_why69 7mo ago
The "corruption" allegation is that for, yes, SpaceX, index funds will effectively be "forced" to buy in right away at their IPO price, rather than seeing where they settle before getting the money in. Given that most people have most of their money in index funds, it's sort-of an automatic buy and raises some hackles about a fixed game. Saying "you can trade the basket yourself minus the names you don't like" is not a real counterargument. Most of us are not going to do that, I'm not going to do that and I'm writing this post right now. John Doe is certainly not doing that.

master-lincoln 7mo ago

what would force you? I guess if you are a greedy bastard you might feel that way...