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No, it's wrong. Amazon is worth $2.81T right now and only represents 4.03% of the S&P500. So a $1T share would represent less than 2% of the S&P500. This is s

No, it's wrong. Amazon is worth $2.81T right now and only represents 4.03% of the S&P500. So a $1T share would represent less than 2% of the S&P500. This is significant for a single company, and 6% for 3 shit-tier companies (SpaceX, OpenAI and Anthropic) is even more significant, but we're far from "losing retirement if they go bust"-levels.

ben_w 5mo ago
I've recently learned a new finance term, "float", and I want to check if this makes a difference to this discussion? https://en.wikipedia.org/wiki/Public_float https://en.wikipedia.org/wiki/Public_float I hear S&P 500 is weighted on float rather than on market cap, while Nasdaq 100 is based on market cap.
- eru 5mo ago
  Yes, that's mostly correct. Many indices are weighted by something like free float.
- outside1234 5mo ago
  Yes, and in this case, it means that SpaceX will only be approximately 0.1% of the SP500.
- petesergeant 5mo ago
  One of the places you could have learned this would be the article itself: > most share indices weight firms in proportion to the value only of shares they have released for public trading (the “free float”). For SpaceX, this means just the $75bn or so of stock it intends to issue in June—so its initial weight in the S&P 500 will be around 0.1%. The NASDAQ 100 is an exception, and has changed its rules to weight companies at up to three times their free float, in an apparent effort to woo Mr Musk. Even so, SpaceX’s probable initial weight in this $40trn index will still only be around 0.5%.
- HWR_14 5mo ago
  NASDAQ will be weighted by 3xfloat upto 100% when SpaceX goes public.
saidnooneever 5mo ago
thank you
djeastm 5mo ago
That's if everyone were acting perfectly rationally, but a world in which those three companies go bankrupt would have everyone panic selling every equity possible like it's the endtimes.
- iLoveOncall 5mo ago
  Anthropic and OpenAI maybe, but I don't think anyone gives a flying fuck about SpaceX, and everyone knows its value is nowhere near a trillion.
  - calmworm 5mo ago
    Unfortunately not everyone knows that. See some comments in this thread.
smugglerFlynn 5mo ago
I wish we would start paying proportional attention to business news, instead of treating AI (or any other "cutting edge") companies as economy-defining and giving these 50+% of the attention. It is especially telling if we try to list out all the psychological biases at play: - Availability & salience bias - vivid, memorable things feel more important than they are - Narrative bias - humans tend to think in stories, and AI tells plenty - Recency and novelty bias — new things feel more consequential than established ones (this one already drives like 80% of all HN content btw) - Proportionality neglect - people are bad at intuitively grasping what percentages mean, even if they see the stats - Social proof and reflexivity - coverage signals importance, and drives more coverage - Status quo invisibility - things that work reliably become invisible (surprisingly, HN is really good in terms of working against this bias, I feel like at least 5% of all posts are some niche "inner daily workings" topics) - Speculation premium in attention - uncertainty generates more discussion than certainty - In-group signaling - cutting-edge things are status markers among influencers
- rtkwe 5mo ago
  On the other hand if you remove the gains from AI related companies the bull market basically disappears. [0] It makes up a small part of the market over all but if the market had been trading sideways for 3+ months people would be feeling quite differently about the economy. [0] https://finance.yahoo.com/markets/article/ai-is-carrying-the-sp-500-rally-chart-of-the-day-100000546.html https://finance.yahoo.com/markets/article/ai-is-carrying-the...
SlinkyOnStairs 5mo ago
You're not modelling the contagion here. The problem is that while any single one isn't that big a share of the S&P 500, similar companies do make up a lot collectively. Excl some non-tech/AI firms: NVIDIA Corp NVDA 8.02% Apple Inc AAPL 6.53% Microsoft Corp MSFT 4.84% Amazon.com Inc AMZN 4.01% Broadcom Inc AVGO 3.36% Alphabet Inc GOOGL 3.32% Alphabet Inc GOOG 3.09% Meta Platforms Inc META 2.23% Micron Technology Inc MU 1.71% Advanced Micro Devices Inc AMD 1.19% Oracle Corp ORCL 0.99% That's 40% of the S&P 500. And if anything happens to the AI bubble all of these go down together. While they won't all go to zero and cause a "-40%" overnight, Nvidia's rise is so meteoric that they will trigger a -8% and the rest's valuation has more than doubled since 2023. Even Apple, which isn't much of an "AI company", is still following the AI-tech hype. If Nvidia eats shit, and the others go -50%, that translates to an overall ~-24% on the stock market. Before any contagion outside the tech industry is considered. Look at the Dotcom Bubble and a -40% to -50% crash is quite plausible.
- irishcoffee 5mo ago
  I wish I could upvote this more. This is the point. Everything is so incestuous now that the problem isn't 2% here or 3% there, it'll be a catastrophe of epic proportions. I do not want things to go kaboom, the CAPE index seems to indicate that what I want isn't relevant.
  - bwfan123 5mo ago
    > Everything is so incestuous now that the problem isn't 2% here or 3% there, it'll be a catastrophe of epic proportions Google and Amazon fund Anthropic which returns the favor with cloud purchases at these hyperscalers. So, google and amazon show increased earnings (via anthropic share markup) and increased cloud revenues via anthropic purchase. SpaceX didnt want to be left behind, so, it signed a deal with Anthropic. Meanwhile capex at hyperscalers, VCs, PE etc is funding the party. Capex is not a concern to anybody as it doesnt appear on either revenues or earnings at the hyperscalers. Downstream is partying from all the spending (server makers, chips, disk etc). Whats not to like ! this is a perpetual money machine. Lets partay !
- lanstin 5mo ago
andrepd 5mo ago
They will drag the rest with it.
DanielHB 5mo ago
If they go bust won't it likely trigger a massive market crash? Afterall index funds will be forced to sell other US stocks to buy them, bringing their values down. Non-passive investors will predict that and divest even more and so on... And that is on top of the IPO companies losing value themselves, this seems likely to trigger a doom-loop until the market reaches a low enough value. This will likely trigger layoffs and companies reducing spending and investments further depressing the economy. Added inflation from oil prices and war. This doesn't seem like one big balloon ready to burst, but more like a house suspended by hundreds of balloons and they are about to be ran over by an airplane.
- baggachipz 5mo ago
  Yeah, think dot-com crash all over again, but probably worse IMO. Problem is, there really isn't a safe place to hide when this all happens. Some are less unsafe, like funds which track dividend-yielding stocks, or gold I guess (but that's just a speculative value store like bitcoin).

ben_w 5mo ago

I've recently learned a new finance term, "float", and I want to check if this makes a difference to this discussion? https://en.wikipedia.org/wiki/Public_float https://en.wikipedia.org/wiki/Public_float I hear S&P 500 is weighted on float rather than on market cap, while Nasdaq 100 is based on market cap.

eru 5mo ago
Yes, that's mostly correct. Many indices are weighted by something like free float.
outside1234 5mo ago
Yes, and in this case, it means that SpaceX will only be approximately 0.1% of the SP500.
petesergeant 5mo ago
One of the places you could have learned this would be the article itself: > most share indices weight firms in proportion to the value only of shares they have released for public trading (the “free float”). For SpaceX, this means just the $75bn or so of stock it intends to issue in June—so its initial weight in the S&P 500 will be around 0.1%. The NASDAQ 100 is an exception, and has changed its rules to weight companies at up to three times their free float, in an apparent effort to woo Mr Musk. Even so, SpaceX’s probable initial weight in this $40trn index will still only be around 0.5%.
HWR_14 5mo ago
NASDAQ will be weighted by 3xfloat upto 100% when SpaceX goes public.

saidnooneever 5mo ago

thank you

djeastm 5mo ago

That's if everyone were acting perfectly rationally, but a world in which those three companies go bankrupt would have everyone panic selling every equity possible like it's the endtimes.

iLoveOncall 5mo ago
Anthropic and OpenAI maybe, but I don't think anyone gives a flying fuck about SpaceX, and everyone knows its value is nowhere near a trillion.
- calmworm 5mo ago
  Unfortunately not everyone knows that. See some comments in this thread.

smugglerFlynn 5mo ago

I wish we would start paying proportional attention to business news, instead of treating AI (or any other "cutting edge") companies as economy-defining and giving these 50+% of the attention. It is especially telling if we try to list out all the psychological biases at play: - Availability & salience bias - vivid, memorable things feel more important than they are - Narrative bias - humans tend to think in stories, and AI tells plenty - Recency and novelty bias — new things feel more consequential than established ones (this one already drives like 80% of all HN content btw) - Proportionality neglect - people are bad at intuitively grasping what percentages mean, even if they see the stats - Social proof and reflexivity - coverage signals importance, and drives more coverage - Status quo invisibility - things that work reliably become invisible (surprisingly, HN is really good in terms of working against this bias, I feel like at least 5% of all posts are some niche "inner daily workings" topics) - Speculation premium in attention - uncertainty generates more discussion than certainty - In-group signaling - cutting-edge things are status markers among influencers

rtkwe 5mo ago
On the other hand if you remove the gains from AI related companies the bull market basically disappears. [0] It makes up a small part of the market over all but if the market had been trading sideways for 3+ months people would be feeling quite differently about the economy. [0] https://finance.yahoo.com/markets/article/ai-is-carrying-the-sp-500-rally-chart-of-the-day-100000546.html https://finance.yahoo.com/markets/article/ai-is-carrying-the...

SlinkyOnStairs 5mo ago

You're not modelling the contagion here. The problem is that while any single one isn't that big a share of the S&P 500, similar companies do make up a lot collectively. Excl some non-tech/AI firms: NVIDIA Corp NVDA 8.02% Apple Inc AAPL 6.53% Microsoft Corp MSFT 4.84% Amazon.com Inc AMZN 4.01% Broadcom Inc AVGO 3.36% Alphabet Inc GOOGL 3.32% Alphabet Inc GOOG 3.09% Meta Platforms Inc META 2.23% Micron Technology Inc MU 1.71% Advanced Micro Devices Inc AMD 1.19% Oracle Corp ORCL 0.99% That's 40% of the S&P 500. And if anything happens to the AI bubble all of these go down together. While they won't all go to zero and cause a "-40%" overnight, Nvidia's rise is so meteoric that they will trigger a -8% and the rest's valuation has more than doubled since 2023. Even Apple, which isn't much of an "AI company", is still following the AI-tech hype. If Nvidia eats shit, and the others go -50%, that translates to an overall ~-24% on the stock market. Before any contagion outside the tech industry is considered. Look at the Dotcom Bubble and a -40% to -50% crash is quite plausible.

irishcoffee 5mo ago
I wish I could upvote this more. This is the point. Everything is so incestuous now that the problem isn't 2% here or 3% there, it'll be a catastrophe of epic proportions. I do not want things to go kaboom, the CAPE index seems to indicate that what I want isn't relevant.
- bwfan123 5mo ago
  > Everything is so incestuous now that the problem isn't 2% here or 3% there, it'll be a catastrophe of epic proportions Google and Amazon fund Anthropic which returns the favor with cloud purchases at these hyperscalers. So, google and amazon show increased earnings (via anthropic share markup) and increased cloud revenues via anthropic purchase. SpaceX didnt want to be left behind, so, it signed a deal with Anthropic. Meanwhile capex at hyperscalers, VCs, PE etc is funding the party. Capex is not a concern to anybody as it doesnt appear on either revenues or earnings at the hyperscalers. Downstream is partying from all the spending (server makers, chips, disk etc). Whats not to like ! this is a perpetual money machine. Lets partay !
lanstin 5mo ago

andrepd 5mo ago

They will drag the rest with it.

DanielHB 5mo ago

If they go bust won't it likely trigger a massive market crash? Afterall index funds will be forced to sell other US stocks to buy them, bringing their values down. Non-passive investors will predict that and divest even more and so on... And that is on top of the IPO companies losing value themselves, this seems likely to trigger a doom-loop until the market reaches a low enough value. This will likely trigger layoffs and companies reducing spending and investments further depressing the economy. Added inflation from oil prices and war. This doesn't seem like one big balloon ready to burst, but more like a house suspended by hundreds of balloons and they are about to be ran over by an airplane.

baggachipz 5mo ago
Yeah, think dot-com crash all over again, but probably worse IMO. Problem is, there really isn't a safe place to hide when this all happens. Some are less unsafe, like funds which track dividend-yielding stocks, or gold I guess (but that's just a speculative value store like bitcoin).