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The purpose of a benchmark is to reflect the market. If the US economy is pumping out high-growth but overpriced & unprofitable companies via IPOs, at unreasona
by tristanj 5mo ago
The purpose of a benchmark is to reflect the market. If the US economy is pumping out high-growth but overpriced & unprofitable companies via IPOs, at unreasonable valuations, the benchmark should reflect that.
It's not S&P's fault this is happening.
- jddj 5mo agoOn the contrary. There are many benchmarks, some small subset of which are intended to reflect the whole market. There are indices for every little thematic and niche corner or strategy or idea, there are broad-as-possible indices, and there are indices with requirements like listed age and profitability.
- tristanj 5mo agoI'm not debating any of that. This discussion is about the S&P500 as a benchmark, which has an expressly stated purpose of tracking large-cap US equities. This discussion is about if S&P500 actually achieves this benchmark, when it has (antiquated) rules that exclude large-cap US companies of the likes of SpaceX, Anthropic, and OpenAI.
- matthewdgreen 5mo agoBenchmarks are governed (to some extent) by natural selection. If the S&P criteria prove obsolete, then it will be replaced by other indices that use your proposed criteria. Everything's going to be just fine.