6 ms·

Yep!! Respect to them. I was planning to move to an equal weight index but this gives me a little more time to evaluate options.

JumpCrisscross 4mo ago
> I was planning to move to an equal weight index The only substantial effect I've seen of the influencers who were doomsplaining this decision was some minor churn in retirement assets from low-cost S&P 500 followers to higher-cost funds. (The market, broadly, never priced in a rebalancing of the S&P 500. So this was almost entirely whipped up by influencers.) Broadly speaking, if you were actually considering trading on the back of S&P's decision, or worse, if you actually did, consider trimming who you follow for financial advice.
- vostrocity 4mo ago
  The market may not have ever priced in a rebalancing of the S&P 500, but the S&P 500 also has never allowed entry of companies that may never become profitable.
  - JumpCrisscross 4mo ago
    > the S&P 500 also has never allowed entry of companies that may never become profitable Yup. Which is why it was always a long shot. I personally thought they'd adopt some of the seasoning rules, but they were more conservative than even that.
  - matwood 4mo ago
    > but the S&P 500 also has never allowed entry of companies that may never become profitable I suspect this will be revisited if all these companies are still 1T+ market cap 12 months from now. At some point the S&P will have to say the market itself has spoken and likely capitulate.
    - JumpCrisscross 4mo ago
      > At some point the S&P will have to say the market itself has spoken and likely capitulate It really doesn't. The S&P 500 is an opinionated index. If you want total market, buy a total-market index. My guess is S&P will stick to its guns, Anthropic will season in, and SpaceX and OpenAI (if it goes public) will stay outside for a few years.
      - matwood 4mo ago
        They can certainly say they no longer track the 500 leading large-cap companies on the US exchanges. The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.
        bootsmann 4mo ago
        Read the quote you posted again
- kgwgk 4mo ago
  > The market, broadly, never priced in a rebalancing of the S&P 500 And if you had seen it what would have that pricing looked like?
  - JumpCrisscross 4mo ago
    > if you had seen it what would have that pricing looked like? Look up rebalancing trades, or, less graciously, rebalancing front running. If the index is going to rebalance to include a new entrant, you'll see the other components trade down in anticipation. It's a very tight signal, and it wasn't present to any measurable degree for the S&P 500.
    - kgwgk 4mo ago
      Again, what would it have looked like? What does “other components trade down in anticipation” mean when SPCX doesn’t even exist?
      - JumpCrisscross 4mo ago
        > What does “other components trade down in anticipation” mean when SPCX doesn’t even exist? Let's model an equal-weighted index with nine components, with each thus representing 1/9th of the index's allocation. You learn that a tenth member is going to be added. You don't know who it is. But you know that each of those nine will, after that member is included, represent 1/10th of the index's allocation versus the 1/9th they did before. You know a precise bucket of trades everyone following the index is going to mechanically enter into. Which means it behooves you to be on the other side of it. When rebalancing–or new inclusion–occurs, you see this pre-trading. Similar to merger arb. But much more clear as a signal because you see it in precise ratios across the index's members. It's difficult to pick up for small indices. But for something like the S&P 500, you'd expect to see someone selling those shares in anticipation, and, now that the rule isn't going into effect, someone dumping those shares in those ratios.
        kgwgk 4mo ago
zeroonetwothree 4mo ago
They weight by free float so it would been something like 0.3%. Hardly the end of the world
- ddalex 4mo ago
  "they only be stealing a tiny amount so not worth doing anything"
- figmert 4mo ago
  Why is that relevant? The rules are in place for a reason, why does it matter what the percentage is? They're not profitable. When they prove they're worth the dollars, they can be included, per the rules. Also, S&P500 has a current market cap of $67 trillion, 0.3% of that is some $200billion. That is essentially a wealth transfer to the rich. They don't need it.
  - kortilla 4mo ago
    > That is essentially a wealth transfer to the rich. They don't need it. These are not valid arguments. The companies that get added to the S&P are always owned in some fraction by rich people. SpaceX is obviously majorly owned by Elon, but it’s also owned by regular employees, a bunch of private investors and other funds that regular people invest in. > They're not profitable. Right > When they prove they're worth the dollars, Profitable isn’t related to “worth the dollars”. You need to look at income and how much is being reinvested into growth. Amazon famously remained unprofitable due to reinvestment and waiting for them to become profitable before investing was a bad bet.
    - SkiFire13 4mo ago
      > SpaceX is obviously majorly owned by Elon, but it’s also owned by regular employees, a bunch of private investors and other funds that regular people invest in. Is it really owned by them if Elon retains most of the voting rights anyway?
      - 4mo ago
LinguaBrowse 4mo ago
I’ve moved my S&P 500 investments to the Equal Weight index to reduce my exposure to AI. Quite aside from SpaceX, I think the large-cap tech companies are making some uncomfortably large bets on AI and any major upset could cause a domino effect. But as so many ETFs have a significant stake in large-cap US tech stocks (the top 10 holdings of the iShares MSCI World ETF is entirely comprised US Big Tech, making up 20% of the value of the ETF), I found S&P 500 Equal Weight to be pretty attractive. As for SpaceX itself? I feel the numbers involved all sound a bit unbelievable to me. I fear that there will be a rug-pull sometime post-IPO, and retail investors (and taxpayers, if the US Government ends up taking a stake, as they have recently indicated they might do for OpenAI) will inevitably be left holding the bag.
- frozenseven 4mo ago
  [flagged]
  - Saline9515 4mo ago
    Have you heard of the dot com bubble?
    - frozenseven 4mo ago
      Yes, I've heard of it. And I say that there's no bubble and the AI market is greatly undervalued.
      - speed_spread 4mo ago
        The Internet brought obvious benefits to everyone. New ways to communicate, associate and do business. It was a tool of collective empowerment. It promised a more equal, dynamic society. The promises of AI are much less constructive. I can see the power being immediately funneled to the top of the pyramid while everyone else sucks it up. It's not a future I want invest in or take part of.
      - bmelton 4mo ago
andsoitis 4mo ago
> I was planning to move to an equal weight index but this gives me a little more time to evaluate options. S&P requires 4 consecutive profitable quarters, amongst other requirements, so if one of the new mega caps like SpaceX or Anthropic or OpenAI get included, you’d probably want to get the benefit of their performance. Put differently, if one previously specifically picked an index fund that is not equal weighted, why would you change from that strategy?
- integricho 4mo ago
  But they haven't been good performers, and don't deserve joining s&p, and that is the point, do not make exceptions just because Elon Musk or whatever delusional billionaire says so.
- enaaem 4mo ago
  Many people already have x% of their portfolio allocated to a growth fund, that might include fast growing AI companies. You need to keep the risk profile consistent. If you change the rules you mess up people's strategy.
  - abustamam 4mo ago
    Yeah if people wanted to change their risk profile they would, they wouldn't want their low risk investments to suddenly be high risk. That would suck and mean disaster if that person is heavily allocated to low risk near retirement time.
- Ensorceled 4mo ago
  > you’d probably want to get the benefit of their performance. What performance? None of these companies have established "performance" and they are all still burning money in a race to be the industry leader. There is no evidence these companies can be profitable without some kind of significant hardware advance.
KaiserPro 4mo ago
Its a sensible move. The spaceX IPO is a mess, and if it doesn't go full enron I'm not sure what will happen to the wider market.
- matwood 4mo ago
  BTW, Enron was in the S&P 500 when it went bankrupt. Other fun fact is that it was replaced with NVDA.
noncoml 4mo ago
I moved to BP LG CAP VAL EQ CIT

JumpCrisscross 4mo ago

> I was planning to move to an equal weight index The only substantial effect I've seen of the influencers who were doomsplaining this decision was some minor churn in retirement assets from low-cost S&P 500 followers to higher-cost funds. (The market, broadly, never priced in a rebalancing of the S&P 500. So this was almost entirely whipped up by influencers.) Broadly speaking, if you were actually considering trading on the back of S&P's decision, or worse, if you actually did, consider trimming who you follow for financial advice.

vostrocity 4mo ago
The market may not have ever priced in a rebalancing of the S&P 500, but the S&P 500 also has never allowed entry of companies that may never become profitable.
- JumpCrisscross 4mo ago
  > the S&P 500 also has never allowed entry of companies that may never become profitable Yup. Which is why it was always a long shot. I personally thought they'd adopt some of the seasoning rules, but they were more conservative than even that.
- matwood 4mo ago
  > but the S&P 500 also has never allowed entry of companies that may never become profitable I suspect this will be revisited if all these companies are still 1T+ market cap 12 months from now. At some point the S&P will have to say the market itself has spoken and likely capitulate.
  - JumpCrisscross 4mo ago
    > At some point the S&P will have to say the market itself has spoken and likely capitulate It really doesn't. The S&P 500 is an opinionated index. If you want total market, buy a total-market index. My guess is S&P will stick to its guns, Anthropic will season in, and SpaceX and OpenAI (if it goes public) will stay outside for a few years.
    - matwood 4mo ago
      They can certainly say they no longer track the 500 leading large-cap companies on the US exchanges. The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.
      - bootsmann 4mo ago
        Read the quote you posted again
kgwgk 4mo ago
> The market, broadly, never priced in a rebalancing of the S&P 500 And if you had seen it what would have that pricing looked like?
- JumpCrisscross 4mo ago
  > if you had seen it what would have that pricing looked like? Look up rebalancing trades, or, less graciously, rebalancing front running. If the index is going to rebalance to include a new entrant, you'll see the other components trade down in anticipation. It's a very tight signal, and it wasn't present to any measurable degree for the S&P 500.
  - kgwgk 4mo ago
    Again, what would it have looked like? What does “other components trade down in anticipation” mean when SPCX doesn’t even exist?
    - JumpCrisscross 4mo ago
      > What does “other components trade down in anticipation” mean when SPCX doesn’t even exist? Let's model an equal-weighted index with nine components, with each thus representing 1/9th of the index's allocation. You learn that a tenth member is going to be added. You don't know who it is. But you know that each of those nine will, after that member is included, represent 1/10th of the index's allocation versus the 1/9th they did before. You know a precise bucket of trades everyone following the index is going to mechanically enter into. Which means it behooves you to be on the other side of it. When rebalancing–or new inclusion–occurs, you see this pre-trading. Similar to merger arb. But much more clear as a signal because you see it in precise ratios across the index's members. It's difficult to pick up for small indices. But for something like the S&P 500, you'd expect to see someone selling those shares in anticipation, and, now that the rule isn't going into effect, someone dumping those shares in those ratios.
      - kgwgk 4mo ago

zeroonetwothree 4mo ago

They weight by free float so it would been something like 0.3%. Hardly the end of the world

ddalex 4mo ago
"they only be stealing a tiny amount so not worth doing anything"
figmert 4mo ago
Why is that relevant? The rules are in place for a reason, why does it matter what the percentage is? They're not profitable. When they prove they're worth the dollars, they can be included, per the rules. Also, S&P500 has a current market cap of $67 trillion, 0.3% of that is some $200billion. That is essentially a wealth transfer to the rich. They don't need it.
- kortilla 4mo ago
  > That is essentially a wealth transfer to the rich. They don't need it. These are not valid arguments. The companies that get added to the S&P are always owned in some fraction by rich people. SpaceX is obviously majorly owned by Elon, but it’s also owned by regular employees, a bunch of private investors and other funds that regular people invest in. > They're not profitable. Right > When they prove they're worth the dollars, Profitable isn’t related to “worth the dollars”. You need to look at income and how much is being reinvested into growth. Amazon famously remained unprofitable due to reinvestment and waiting for them to become profitable before investing was a bad bet.
  - SkiFire13 4mo ago
    > SpaceX is obviously majorly owned by Elon, but it’s also owned by regular employees, a bunch of private investors and other funds that regular people invest in. Is it really owned by them if Elon retains most of the voting rights anyway?
    - 4mo ago

LinguaBrowse 4mo ago

I’ve moved my S&P 500 investments to the Equal Weight index to reduce my exposure to AI. Quite aside from SpaceX, I think the large-cap tech companies are making some uncomfortably large bets on AI and any major upset could cause a domino effect. But as so many ETFs have a significant stake in large-cap US tech stocks (the top 10 holdings of the iShares MSCI World ETF is entirely comprised US Big Tech, making up 20% of the value of the ETF), I found S&P 500 Equal Weight to be pretty attractive. As for SpaceX itself? I feel the numbers involved all sound a bit unbelievable to me. I fear that there will be a rug-pull sometime post-IPO, and retail investors (and taxpayers, if the US Government ends up taking a stake, as they have recently indicated they might do for OpenAI) will inevitably be left holding the bag.

frozenseven 4mo ago
[flagged]
- Saline9515 4mo ago
  Have you heard of the dot com bubble?
  - frozenseven 4mo ago
    Yes, I've heard of it. And I say that there's no bubble and the AI market is greatly undervalued.
    - speed_spread 4mo ago
      The Internet brought obvious benefits to everyone. New ways to communicate, associate and do business. It was a tool of collective empowerment. It promised a more equal, dynamic society. The promises of AI are much less constructive. I can see the power being immediately funneled to the top of the pyramid while everyone else sucks it up. It's not a future I want invest in or take part of.
    - bmelton 4mo ago

andsoitis 4mo ago

> I was planning to move to an equal weight index but this gives me a little more time to evaluate options. S&P requires 4 consecutive profitable quarters, amongst other requirements, so if one of the new mega caps like SpaceX or Anthropic or OpenAI get included, you’d probably want to get the benefit of their performance. Put differently, if one previously specifically picked an index fund that is not equal weighted, why would you change from that strategy?

integricho 4mo ago
But they haven't been good performers, and don't deserve joining s&p, and that is the point, do not make exceptions just because Elon Musk or whatever delusional billionaire says so.
enaaem 4mo ago
Many people already have x% of their portfolio allocated to a growth fund, that might include fast growing AI companies. You need to keep the risk profile consistent. If you change the rules you mess up people's strategy.
- abustamam 4mo ago
  Yeah if people wanted to change their risk profile they would, they wouldn't want their low risk investments to suddenly be high risk. That would suck and mean disaster if that person is heavily allocated to low risk near retirement time.
Ensorceled 4mo ago
> you’d probably want to get the benefit of their performance. What performance? None of these companies have established "performance" and they are all still burning money in a race to be the industry leader. There is no evidence these companies can be profitable without some kind of significant hardware advance.

KaiserPro 4mo ago

Its a sensible move. The spaceX IPO is a mess, and if it doesn't go full enron I'm not sure what will happen to the wider market.

matwood 4mo ago
BTW, Enron was in the S&P 500 when it went bankrupt. Other fun fact is that it was replaced with NVDA.

noncoml 4mo ago

I moved to BP LG CAP VAL EQ CIT