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It’s a benchmark of the market under certain rules, like having multiple quarters of earnings for the market to value them at. These companies want special exc

by lovich 5mo ago

It’s a benchmark of the market under certain rules, like having multiple quarters of earnings for the market to value them at. These companies want special exceptions. If you are an exception why should you be included in a benchmark? At best they should have an asterisk against their name like Sammy Sosa or Mark McGuire if they are not following the same rules.

tristanj 5mo ago
Your baseball cheating analogy makes no sense here. Rules against corked bats / steroids exist so people don't cheat at a sport and all players can compete equally. S&P rules are supposed to make the index reflect the market. Totally different. The profitability requirement is something made up by the S&P committee. If that rule ends up excluding trillions in market cap, the rule has defeated its own purpose. The 12 months of profitability requirement punishes high-growth companies that invest their FCF into growing the business vs taking profits. It excludes companies like Amazon, which when ran by Bezos, was famously unprofitable and invested all free cash flow into growing the business and never turned a significant profit until >20 years after its founding.
- lovich 5mo ago
  > Rules against corked bats / steroids exist so people don't cheat at a sport and all players can compete equally. > The profitability requirement is something made up by the S&P committee. Those are both equally made up. In this case the rules are being changed for new entrants into the market such as SpaceX for the Nasdaq and other benchmarks that are allowing it for that none of the previous companies in said index were allowed to get in under. And since it’s 15 days and I know most companies have lockout terms on the order of months for various levels of stock, I’m hesitant to believe this won’t modify the benchmarks beyond what has happened with previous inclusions. `JumpCrisscross’s reply to one of my other comments on this thread in regards to the S&P being a committee based decision actually has had me pause to think, but your argument that the rules are arbitrary so it can’t be cheating like my baseball analogy fails to land.
  - tristanj 5mo ago
    Baseball rules exist to prevent cheating. The S&P rules exist so the index can accurately reflect the market. When S&P rules end up excluding a significant part of the market with trillions in real market cap, that means the rules are badly designed and broken by its own standard. You're trying to compare updating badly written S&P 500 rules to cheating, which makes no sense at all. They are completely different. And calling out how the rules are being changed for new entrants into the market such as SpaceX on Nasdaq proves my point. Index providers are already quietly admitting their criteria are too rigid. Even S&P adjusted their rules to allow SpaceX into the index, although only for the total market index. https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-Consultation-on-Treatment-of-MegaCap-Companies-Results https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-...
    - tankenmate 5mo ago
      "The S&P rules exist so the index can accurately reflect the market", the rules exist to reflect a subset of the market, and the committee chooses that subset. It's their subset so they get to set the rules, you don't have to use it if you don't want to. If you don't like that subset then create your own index. Then you just need to convince others to use it.
      - tristanj 5mo ago
        Per the S&P 500 website, the claimed subset of the market is "U.S. large-cap equities". S&P claims their index is "best single gauge of U.S. large-cap equities". But, it's clear that given the current iteration of the rules, none of the major upcoming IPOs of Spacex, Anthropic, or OpenAI are eligible for S&P500 inclusion, and they likely will not be for years. Claiming to have the "best single gauge of U.S. large-cap equities", yet having rules that exclude three of the top 20 largest U.S large-cap equities which make up ~5% of the total market cap of the U.S. stock market, means your benchmark is inaccurate by my book.
        tankenmate 5mo ago
- rileymat2 5mo ago
  What is it a benchmark for? All investable public stocks or the economy writ large?
  - tristanj 5mo ago
    [dead]
  - ywvcbk 5mo ago
    Neither? What makes you think it was supposed to be a benchmark for either. Amongst other thing weights are based on the value of shares that are traded publicly, not market cap.
- lelanthran 5mo ago
  > S&P rules are supposed to make the index reflect the market. Where did you find that? Link? I ask because common understanding is that the index is a stable tracker of the market, specifically to exclude volatility. IOW, it reflects a smoothed market, not a point-in-time-with-daily-granularity market. I would really like to know where you read what you read.
  - tristanj 5mo ago
    The S&P 500 brochure describes itself as "the best single gauge of large-cap U.S. equities". That language implies they act as a benchmark, which I find questionable, given that based on their current eligibility requirements, it would exclude all three of SpaceX, Anthropic, and OpenAI. All three companies are in the top 10 largest companies in the US by market cap, based on their current valuations. If these companies maintain their valuations over the next year, they'd still be ineligible under current rules. Because none of them are GAAP, they're all heavily reinvesting cash-flow into growth. These companies may be excluded from the S&P500 for potentially years, until they reach 12 months of profitability. A benchmark of the U.S. stock market that excludes multiple of the 10 largest U.S. companies cannot be taken seriously. https://www.spglobal.com/spdji/en/brochure/article/sp-500-brochure-the-gauge-of-the-us-large-cap-market/ https://www.spglobal.com/spdji/en/brochure/article/sp-500-br...
    - ywvcbk 5mo ago
      S&P 500 weights are based the value of shares available on the public market not the market cap. Based on that SpaceX will be nowhere near the top 10. Do you think their valuations wouldn't fall dramatically if they were willing to float a significant proportion of their shares on the market anytime soon.
      - tristanj 5mo ago
        I addressed that exact point here https://news.ycombinator.com/item?id=48407542 https://news.ycombinator.com/item?id=48407542 Based on previous IPOs, SpaceX will grow to ~40% float by 12 months, thus if it keeps its current valuation unchanged, will remain near the top 10 spot.

by lovich 5mo ago

tristanj 5mo ago

Your baseball cheating analogy makes no sense here. Rules against corked bats / steroids exist so people don't cheat at a sport and all players can compete equally. S&P rules are supposed to make the index reflect the market. Totally different. The profitability requirement is something made up by the S&P committee. If that rule ends up excluding trillions in market cap, the rule has defeated its own purpose. The 12 months of profitability requirement punishes high-growth companies that invest their FCF into growing the business vs taking profits. It excludes companies like Amazon, which when ran by Bezos, was famously unprofitable and invested all free cash flow into growing the business and never turned a significant profit until >20 years after its founding.

lovich 5mo ago
> Rules against corked bats / steroids exist so people don't cheat at a sport and all players can compete equally. > The profitability requirement is something made up by the S&P committee. Those are both equally made up. In this case the rules are being changed for new entrants into the market such as SpaceX for the Nasdaq and other benchmarks that are allowing it for that none of the previous companies in said index were allowed to get in under. And since it’s 15 days and I know most companies have lockout terms on the order of months for various levels of stock, I’m hesitant to believe this won’t modify the benchmarks beyond what has happened with previous inclusions. `JumpCrisscross’s reply to one of my other comments on this thread in regards to the S&P being a committee based decision actually has had me pause to think, but your argument that the rules are arbitrary so it can’t be cheating like my baseball analogy fails to land.
- tristanj 5mo ago
  Baseball rules exist to prevent cheating. The S&P rules exist so the index can accurately reflect the market. When S&P rules end up excluding a significant part of the market with trillions in real market cap, that means the rules are badly designed and broken by its own standard. You're trying to compare updating badly written S&P 500 rules to cheating, which makes no sense at all. They are completely different. And calling out how the rules are being changed for new entrants into the market such as SpaceX on Nasdaq proves my point. Index providers are already quietly admitting their criteria are too rigid. Even S&P adjusted their rules to allow SpaceX into the index, although only for the total market index. https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-Consultation-on-Treatment-of-MegaCap-Companies-Results https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-...
  - tankenmate 5mo ago
    "The S&P rules exist so the index can accurately reflect the market", the rules exist to reflect a subset of the market, and the committee chooses that subset. It's their subset so they get to set the rules, you don't have to use it if you don't want to. If you don't like that subset then create your own index. Then you just need to convince others to use it.
    - tristanj 5mo ago
      Per the S&P 500 website, the claimed subset of the market is "U.S. large-cap equities". S&P claims their index is "best single gauge of U.S. large-cap equities". But, it's clear that given the current iteration of the rules, none of the major upcoming IPOs of Spacex, Anthropic, or OpenAI are eligible for S&P500 inclusion, and they likely will not be for years. Claiming to have the "best single gauge of U.S. large-cap equities", yet having rules that exclude three of the top 20 largest U.S large-cap equities which make up ~5% of the total market cap of the U.S. stock market, means your benchmark is inaccurate by my book.
      - tankenmate 5mo ago
rileymat2 5mo ago
What is it a benchmark for? All investable public stocks or the economy writ large?
- tristanj 5mo ago
  [dead]
- ywvcbk 5mo ago
  Neither? What makes you think it was supposed to be a benchmark for either. Amongst other thing weights are based on the value of shares that are traded publicly, not market cap.
lelanthran 5mo ago
> S&P rules are supposed to make the index reflect the market. Where did you find that? Link? I ask because common understanding is that the index is a stable tracker of the market, specifically to exclude volatility. IOW, it reflects a smoothed market, not a point-in-time-with-daily-granularity market. I would really like to know where you read what you read.
- tristanj 5mo ago
  The S&P 500 brochure describes itself as "the best single gauge of large-cap U.S. equities". That language implies they act as a benchmark, which I find questionable, given that based on their current eligibility requirements, it would exclude all three of SpaceX, Anthropic, and OpenAI. All three companies are in the top 10 largest companies in the US by market cap, based on their current valuations. If these companies maintain their valuations over the next year, they'd still be ineligible under current rules. Because none of them are GAAP, they're all heavily reinvesting cash-flow into growth. These companies may be excluded from the S&P500 for potentially years, until they reach 12 months of profitability. A benchmark of the U.S. stock market that excludes multiple of the 10 largest U.S. companies cannot be taken seriously. https://www.spglobal.com/spdji/en/brochure/article/sp-500-brochure-the-gauge-of-the-us-large-cap-market/ https://www.spglobal.com/spdji/en/brochure/article/sp-500-br...
  - ywvcbk 5mo ago
    S&P 500 weights are based the value of shares available on the public market not the market cap. Based on that SpaceX will be nowhere near the top 10. Do you think their valuations wouldn't fall dramatically if they were willing to float a significant proportion of their shares on the market anytime soon.
    - tristanj 5mo ago
      I addressed that exact point here https://news.ycombinator.com/item?id=48407542 https://news.ycombinator.com/item?id=48407542 Based on previous IPOs, SpaceX will grow to ~40% float by 12 months, thus if it keeps its current valuation unchanged, will remain near the top 10 spot.