https://www.benzinga.com/markets/tech/26/03/51248353/michael...
Real question: What is the real impact of this rule change? To me, it seems so minor. Three months is just a blip in time for any long term investor.
> which corruptly will force us all to buy into these companies
Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. You can trade the basket yourself minus the names that you don't like.
Finally, I would say that S&P 500 index is far more important than NASDAQ 100. To join the S&P 500 index, the name must be profitable for the most recent year. (four quarters). Recall that Uber IPO'd in 2019, but was not profitable until 2023. OpenAI probably will not be profitable when it goes public; thus, it will not join the S&P 500 immediately.
I think the bigger story is SpaceX. It will likely IPO very close to a 1T USD market cap (with a small float: ~10%). And, thanks to StarLink, I assume that SpaceX is now wildly profitable.
Isn't the idea with the indexes that they allow you to intentionally not take an activist position in the market? The exposure is not tied to any underlying market hypothesis. In other words, if we make people form a market hypothesis in order to decide whether or not to hold this index, it has failed in its purpose.
Saying "you can trade the basket yourself minus the names you don't like" is not a real counterargument. Most of us are not going to do that, I'm not going to do that and I'm writing this post right now. John Doe is certainly not doing that.
”Most people” is doing a lot of heavy lifting there; 52% in the US and just 25-30% globally invest their money
More likely than not, most of us are already holding stock in these companies one way or another. All the Mag 7 hold a major chunk of OAI and Anthropic stock anyway, slower entry does not make it less risky for us.
Even if the big tech companies did not hold any stock, they are still the biggest vendors and their own order books is hugely impacted by the AI demand from these two ( and others in this space), either way we are all in this together.
Passive investments are good, but if taken too far as they clearly have been in the last decade they become a scam. Everyone is SIPing into it, and there is infinite liquidity. Until one big whale finally decides they are booking it, then all hell will break loose on the same damn day.
Doubt it.
The world does not allow perfect competition.
What does this have to do with anything?
Plenty of asset managers construct indices to save fees.
However in the long term, economics usually finds the most efficient way.
Maintaining inefficient structures like tariffs or monopolies becomes more and more expensive and eventually untenable and disruptions will occur.
Really feels like 1928
You can just choose not to play the accounting game, and only choose the ones that actually gaap viable as investment opportunities. For example mag7 - tesla are all relatively cheap when they dip.
Some times the best play is just not to play. If you think they are too risky, walk away. There are enough good oppotunities
> mag7 (minus) tesla are all relatively cheap when they dip
Company Ticker P/E Ratio
Apple Inc. AAPL ~33
Microsoft Corporation MSFT ~25
Alphabet Inc. GOOGL ~29
Amazon.com Inc. AMZN ~30
NVIDIA Corporation NVDA ~38
Meta Platforms Inc. META ~28
Tesla Inc. TSLA ~378
How much do these names need to "dip" for you to consider them cheap?
- Growth rate: you can't compare them to the average single digit growth companies or dividend focused companies. Most of these tech companies revenue are still growing at double digit with good moat. Pe is a good measure but it's not absolute. If you believe they sustain their growth then it's a good bet. And you can choose not to buy in their growth stories too. At the end of the day investment is about judgement call
- History benchmark: some of their pe is at historical low. So they are actually cheaper than before.
- Pe ttm and forward pe: how much pe ttm are they at? how much forward pe are they projecting? If forward pe is significantly lower, that means the current analysts consensus is that they will grow in future
- Pe is the a number but it's not everything. You need to consider multiple things to decide if that's undervalued for you. It's highly subjective as different interpretations are common.
- This post is about if you want to play the gaap game with private tech companies. My point is that there are still many public companies that are cheap at certain point. You just need to be patient and be willing to research and wait. For example, meta at around 500 was a buy for me, but since then it has rebounded it's still good but not as undervalued as a few days ago