IMHO, still too much. Someone posted this link [1] recently.
https://www.defianceetfs.com/xmag/ ("XMAG, the first ETF designed to provide investors with exposure to the S&P 500, excluding the “Magnificent 7” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla). XMAG offers a unique opportunity for investors to access the broader market while reducing concentration risk in these dominant tech stocks.")
https://www.aboutschwab.com/mss/story/how-investing-and-gamb... ("Investing and gambling can both be fun. But they are not the same.")
(none of this is investing advice, educational purposes only)
VOOG has returned 18.28%/yr over 10 years vs 15.63%/yr for VOO, a meaningful gap driven almost entirely by Mag 7 dominance. XMAG has no 10-year track record.
The 10-year total return is 327%, and the 15-year average annual return is 14.4%.
Hard to beat.
Yup. Coupling this change with "oh, and btw, we also want the option to be able to only put out annual or biannual earnings reports not quarterly" means "We want to offload even more risk."
* air quality
* environmental risk
* GHG emissions
* ecological impact
* product sustainability
https://www.inspireetf.com/screening
yet weights ExxonMobil, the 21st largest company:
https://companiesmarketcap.com/
as by far their 2nd largest holding:
$PTL/Inspire does not adjudicate "dial" ethical issues, just switches -- company practices/policies that it views as black-and-white good/bad. "It would be ethical if you produced N% less" doesn't fit that category.
If a 1 to $1.5t IPO that was fast tracked onto the S&P500 and then hoovered up a bunch of index fund money becomes a dud, the organic rebalance is going to start with a full reassessment of if index funds and the S&P can be TRUSTED.
Its very possible it will be more than a blip, although to be fair if it isn't it's going to be the sort thing you aren't going to dodge.
Yes a -1% day should be nothing to a long term holder. Yes they're buying the market; if the market is wrong they shouldn't really have any recourse. But one can also understand that a -1% day that accrues ~entirely to the benefit a small group, who appear to have engineered that outcome has much more emotional valence than a typical down down. It doesn't feel like a bad day on the market, it feels like a heist.
That’s the way indexes roll. I don’t invest in indexes for this reason.
There is a separate structural issue with indexes that is being ignored here. Indexes were never really designed to accommodate companies going public so late with high revenue growth. A couple decades ago companies went public when they were so small that they could grow into the index. This reflects changes in the nature and structure of the capital markets, these new IPOs are just a manifestation of this reality.
Annoying they pushed it into the indexes, but like you said, we've also never had a company come out in the 1T range or even the x00B range. These indexes are supposed to represent the market and can't ignore a 1T market cap company for very long.
EDIT
One other thing to add, is that we still do not know what the stock will price at. It's already come down once, and as more information comes out it can continue to come down until it's finally priced the day before the first trading day.
Not just forcing it into. Forcing the funds to fight for it betting the stock rice higher and higher in a runaway style - the effect created by limited float and high valuation as the funds tracking indexes would try to get the amount reflecting the proportion of the valuation of the company vs. the whole tracked index valuation, and with such huge valuation the limited float leads to the price rise (similar to the short squeeze) and the higher the price on the float the higher the valuation, rinse and repeat...
I don't think dominating an index to anywhere close to that degree is likely here, but I wouldn't be surprised to see some similar strategies being used. Changing the rules is already from the Nortel playbook: The Nortel Rule allowed index funds to have over 10% of their holdings in a single stock.
Do you think people buying the SP 500 are forced to buy Apple? Dell? Workday?
I see headlines like "401k holders forced to by SpaceX" and think "WTF, that is crazy." Then I look at the article and it just says its being added to the SP500.
You may not like that it's being added to the SP500 but no one is saying you are forced to buy any other companies being added to it. I can't believe people are just running with this narrative as-if its logically consistent with what they believe. It's manipulation.
How long after their IPOs were they added to the appropriate indexes? Did the rules change specifically for them?
Is there a relevant distinction you are trying to make, beyond "well, actually"? Call it something else then, like "enshittification of index funds" but it's still the same overall picture of getting money from people who otherwise wouldn't have invested in it
If it's an index fund, like the vast majority of pension/roth/etc funds, then yes, yes they are. It's literally the whole point of an index fund.
https://www.investopedia.com/terms/i/indexfund.asp
> For broad indexes like the S&P 500, it would be impractical or expensive for an investor to construct the right proportions in a portfolio. Index funds do the work by holding a representative sample of the securities. S&P 500 index funds, the most popular and oldest such funds in the U.S., mimic the moves of the stocks in the S&P 500, which covers about 80% of all U.S. equities by market cap.3
So while yes, people are parroting things they don't understand, so are you.
After five days the index funds have to buy at the last price making it final.
In other words even if the vast majority of the market believes it's worth much less, they can force a high price and force basically everyone to hold it via retirement funds.
Comforting the passive investor that the market would have had time to react and to force a lower valuation before their inclusion in the index
> Musk advisers have reached out to major index providers seeking ways to secure earlier inclusion in market benchmarks to lift shares
> Advisers for the company, which recently merged with xAI, have reached out to major index providers, including Nasdaq, to discuss how SpaceX and this year’s other hot startups might join key indexes sooner than normal, according to people familiar with the matter.
> SpaceX hopes to skirt traditional rules in an effort to bring liquidity to its shareholders sooner as part of its planned IPO. SpaceX advisers have sought index policy changes that would fast-track its entry into major indexes for the company and benefit other highly-valued private companies, the people said.
This is simply not _companies being added to SP500, etc._ as you say. This is forceful change of the rules so these companies can reap benefits and it optics is that funds are being _forced_ to buy in.
This is an honest headline:
"SP500 Bends Rules to Include SPACEX in fund At Launch"
This is not:
"401k Holders Forced to By SpaceX"
Unfortunately I have very little knowledge of the historical stock market and if this order of magnitude of bullshit valuation has ever occurred before.
>> In space no one can hear you scam
When it comes to dealing with the abuse of power by those who hold power, the question is not "who's allowing them to do this?", it's "who's going to stop them?".