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This does seem sensible and I’m glad most of my holdings are in s&p funds. Just to play devils advocate though, what are the downsides of not having 3 of the b

by czhu12 4mo ago

This does seem sensible and I’m glad most of my holdings are in s&p funds. Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund, if you hold to track broad market performance? Wouldn’t that have a massive blind spot on AI related growth? Whether or not I personally think ai is over hyped or not, the whole point of these ETFs is to make sure I don’t get a say in the matter, since I’m a terrible stock picker

nyc_pizzadev 4mo ago
No, because AI is still unprofitable and could even be called a speculative venture given the crazy spending amounts. Let the speculators take the risk and reap the rewards. When profitability and all the other conditions are met, I’m happy for the greater market to buy in at the price the market determines. I think everything is functioning as designed.
Analemma_ 4mo ago
The new stocks are still going in, they're just going in after a year (the normal rules), rather than 5 or 15 days. The outrage here wasn't that the stocks were going into the indexes at all, it's that they were going in before price discovery, several quarters of earnings, more float, and expiration of insider lock-up periods, which seemed especially sketchy because of the (correct or not) perception that these IPO valuations are inflated and unrealistic. It seemed like they were trying to dump the bag on the public.
- czhu12 4mo ago
  It seems the general consensus on HN is that they are overvalued and for sure will collapse in value down the road, I could imagine some frustration down the road if these companies actually become, say, 4T by the time they get added to indices.
  - undersuit 4mo ago
    There are different indices if you want to be exposed to that risk.
  - Analemma_ 4mo ago
    What examples have there been in the past of a company which did all its growth in the 1-year period following the IPO, then stopped right when they were added to the index?
    - undersuit 4mo ago
      GoPro?
BeetleB 4mo ago
> Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund The same downsides as not having giant private companies in your fund.
Tangurena2 4mo ago
I'm certain that no index wants to be known as a bubble index. The AI bubble is going to trash huge numbers of industries and wipe out enormous amounts of investor wealth when the music stops. That bubble bursting will make the 2008 financial crisis look like peanuts.
didibus 4mo ago
> the whole point of these ETFs is to make sure I don’t get a say in the matter, since I’m a terrible stock picker When you IPO, the company basically can set its own price. Then investors can buy it or not at that price. If you set the price so high it makes your company one of the biggest, it means automatically index funds will buy you at the price you set for yourself, no questions asked. To prevent abuse from this, index funds that track "biggest stocks" have a waiting period, it was often 1 year. That way, by the time the index buys the stock, the price should be reflective of what the market think it's worth, not what the company decided it was worth when they IPOed. These ETFs have always done this, because you want to hold the biggest company the market chooses as biggest, and not that the company decided.

by czhu12 4mo ago

nyc_pizzadev 4mo ago

No, because AI is still unprofitable and could even be called a speculative venture given the crazy spending amounts. Let the speculators take the risk and reap the rewards. When profitability and all the other conditions are met, I’m happy for the greater market to buy in at the price the market determines. I think everything is functioning as designed.

Analemma_ 4mo ago

The new stocks are still going in, they're just going in after a year (the normal rules), rather than 5 or 15 days. The outrage here wasn't that the stocks were going into the indexes at all, it's that they were going in before price discovery, several quarters of earnings, more float, and expiration of insider lock-up periods, which seemed especially sketchy because of the (correct or not) perception that these IPO valuations are inflated and unrealistic. It seemed like they were trying to dump the bag on the public.

czhu12 4mo ago
It seems the general consensus on HN is that they are overvalued and for sure will collapse in value down the road, I could imagine some frustration down the road if these companies actually become, say, 4T by the time they get added to indices.
- undersuit 4mo ago
  There are different indices if you want to be exposed to that risk.
- Analemma_ 4mo ago
  What examples have there been in the past of a company which did all its growth in the 1-year period following the IPO, then stopped right when they were added to the index?
  - undersuit 4mo ago
    GoPro?

BeetleB 4mo ago

> Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund The same downsides as not having giant private companies in your fund.

Tangurena2 4mo ago

I'm certain that no index wants to be known as a bubble index. The AI bubble is going to trash huge numbers of industries and wipe out enormous amounts of investor wealth when the music stops. That bubble bursting will make the 2008 financial crisis look like peanuts.

didibus 4mo ago

> the whole point of these ETFs is to make sure I don’t get a say in the matter, since I’m a terrible stock picker When you IPO, the company basically can set its own price. Then investors can buy it or not at that price. If you set the price so high it makes your company one of the biggest, it means automatically index funds will buy you at the price you set for yourself, no questions asked. To prevent abuse from this, index funds that track "biggest stocks" have a waiting period, it was often 1 year. That way, by the time the index buys the stock, the price should be reflective of what the market think it's worth, not what the company decided it was worth when they IPOed. These ETFs have always done this, because you want to hold the biggest company the market chooses as biggest, and not that the company decided.