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.
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.
> Major W. Regular people were going to get robbed blind
Not really. One, it was unlikely to happen. The market not pricing in any rebalancing communicated that. Two, the magnitude–even for the S&P 500–would have been small. About a third of stocks are in passive strategies, about 15% in any index, and while most of that is the S&P 500, the index market is incredibly competitive.
S&P made the right move. But the tragedy this episode has revealed, at least to me, is in how venal and influential this new breed of financial influencers on YouTube and X are, and the degree to which they're willing to misinform to get clicks.
Kudos to S&P 500. Vast majority of the world has no clue how trillions of $ from their pension funds is being funneled to the select few. Absolutely pathetic.
> no clue how trillions of $ from their pension funds
Pension funds don't tend to follow the S&P 500, much less automatically. They're sophisticated institutional investors like CalPERS [1] who dabble in everything from public stocks to private equity.
It's other retirement assets, e.g. 401(k)s and IRAs, that tend to follow the S&P 500. But again, with substantial variation.
S&P including these companies would have driven a lot of money towards them. But there was a lot of misinformation around the magnitude of that drive, as well as the breadth of whom it would affect.
In the US at least, many pension funds are not sophisticated, they're small, underfunded, and getting taken for a ride by expensive advisors who promise fantastical returns that will help dig them out of their funding ratio hole. Many would be better off using an S&P 500 index fund for their equity component instead of getting wined and dined into an illiquid, opaque private equity investment.
Telling that among OECD countries, the US is an outlier in having a much lower average funding ratio, and this despite the fantastic performance of the US stock market over the last 15 years.
It's quite clear that there is an effort to engineer mega financial vehicles that index tracking funds are forced to buy. The incentive to do so is massive, and there is nothing illegal about it.
As a holder of index funds such as the S&P, I'd much prefer that these vehicles are excluded for at least some period of time to ensure that the greater fool isn't simply my index portfolio.
The comment above is perfectly clear, and if you have been living under a rock since the Reagan years, that's on you.
See Elon talking about Tesla finally joining the S&P 500 so index funds would finally have to buy its shares. See a hundred examples where socialism is reserved for the few, the jungle and legal constraints for the rest of us.
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.
They weight by free float so it would been something like 0.3%. Hardly the end of the world
"they only be stealing a tiny amount so not worth doing anything"
> 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.
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.
It's a risky investment, yes there's a chance it could go to the moon, but it could also plummet to earth.
Related discussion here: https://news.ycombinator.com/item?id=48405718
Nice to see others are thinking the same, as I just posted the same article as a dupe of this one.
Stocks and money. It's so boring.
I will go drive my old German car now, and get a bit drunk in a bottle of Nebbiolo while listening to some French lunatic with a piano.
Enjoy your trip to Mars and your self driving toy cars. The world is off its rails. Bit time.
Duplicate: https://news.ycombinator.com/item?id=48405718
[dupe] https://news.ycombinator.com/item?id=48405718
Major W. Regular people were going to get robbed blind.
> Major W. Regular people were going to get robbed blind
Not really. One, it was unlikely to happen. The market not pricing in any rebalancing communicated that. Two, the magnitude–even for the S&P 500–would have been small. About a third of stocks are in passive strategies, about 15% in any index, and while most of that is the S&P 500, the index market is incredibly competitive.
S&P made the right move. But the tragedy this episode has revealed, at least to me, is in how venal and influential this new breed of financial influencers on YouTube and X are, and the degree to which they're willing to misinform to get clicks.
Kudos to S&P 500. Vast majority of the world has no clue how trillions of $ from their pension funds is being funneled to the select few. Absolutely pathetic.
> no clue how trillions of $ from their pension funds
Pension funds don't tend to follow the S&P 500, much less automatically. They're sophisticated institutional investors like CalPERS [1] who dabble in everything from public stocks to private equity.
It's other retirement assets, e.g. 401(k)s and IRAs, that tend to follow the S&P 500. But again, with substantial variation.
S&P including these companies would have driven a lot of money towards them. But there was a lot of misinformation around the magnitude of that drive, as well as the breadth of whom it would affect.
[1] https://en.wikipedia.org/wiki/CalPERS
In the US at least, many pension funds are not sophisticated, they're small, underfunded, and getting taken for a ride by expensive advisors who promise fantastical returns that will help dig them out of their funding ratio hole. Many would be better off using an S&P 500 index fund for their equity component instead of getting wined and dined into an illiquid, opaque private equity investment.
Telling that among OECD countries, the US is an outlier in having a much lower average funding ratio, and this despite the fantastic performance of the US stock market over the last 15 years.
> Vast majority of the world has no clue how trillions of $ from their pension funds is being funneled to the select few
Go on, use actual words to make a substantial allegation.
It's quite clear that there is an effort to engineer mega financial vehicles that index tracking funds are forced to buy. The incentive to do so is massive, and there is nothing illegal about it.
As a holder of index funds such as the S&P, I'd much prefer that these vehicles are excluded for at least some period of time to ensure that the greater fool isn't simply my index portfolio.
I did, in fact, use words. Would you prefer heiroglyphics?
All of those are real, natural, organic and, might I add, "actual" words.
The comment above is perfectly clear, and if you have been living under a rock since the Reagan years, that's on you.
See Elon talking about Tesla finally joining the S&P 500 so index funds would finally have to buy its shares. See a hundred examples where socialism is reserved for the few, the jungle and legal constraints for the rest of us.