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Comment by tristanj | Hacker News Reader

Baseball rules exist to prevent cheating. The S&P rules exist so the index can accurately reflect the market. When S&P rules end up excluding a significant part of the market with trillions in real market cap, that means the rules are badly designed and broken by its own standard. You're trying to compare updating badly written S&P 500 rules to cheating, which makes no sense at all. They are completely different.

And calling out how the rules are being changed for new entrants into the market such as SpaceX on Nasdaq proves my point. Index providers are already quietly admitting their criteria are too rigid.

Even S&P adjusted their rules to allow SpaceX into the index, although only for the total market index.

https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-...

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"The S&P rules exist so the index can accurately reflect the market", the rules exist to reflect a subset of the market, and the committee chooses that subset. It's their subset so they get to set the rules, you don't have to use it if you don't want to. If you don't like that subset then create your own index. Then you just need to convince others to use it.

Per the S&P 500 website, the claimed subset of the market is "U.S. large-cap equities". S&P claims their index is "best single gauge of U.S. large-cap equities". But, it's clear that given the current iteration of the rules, none of the major upcoming IPOs of Spacex, Anthropic, or OpenAI are eligible for S&P500 inclusion, and they likely will not be for years.

Claiming to have the "best single gauge of U.S. large-cap equities", yet having rules that exclude three of the top 20 largest U.S large-cap equities which make up ~5% of the total market cap of the U.S. stock market, means your benchmark is inaccurate by my book.

"means your benchmark is inaccurate by my book.", and like The Dude says "Yeah? Well, you know, that's just like uh, your opinion, man."

Create your own benchmark, and you can say it is a subset of "U.S. large-cap equities" and "best single gauge of U.S. large-cap equities" and let the market decide who does a better job.

> Baseball rules exist to prevent cheating.

> The S&P rules exist so the index can accurately reflect the market.

I personally believe that accurately reflecting a market involves not allowing cheating. I personally believe that getting to change the rules so that your IPO gets included before the general market can discern your value because of your connections to the benchmarks is cheating.

If you want to disagree with me on these points then please do so, but understand why I am claiming that this behavior is cheating.

> getting to change the rules so that your IPO gets included before the general market can discern your value because of your connections to the benchmarks is cheating.

I disagree with you because you are vastly exaggerating the scope and effects of the proposed rule change. S&P was going to decrease their minimum index inclusion time from 12 months to 6 months. 6 months is far more than enough time for the market to decide a fair price of an equity. The rule change never ended up happening, hence this post.

There is zero "cheating", I don't understand why you keep harping on that.

> 6 months is far more than enough time for the market to decide a fair price of an equity

6 months from when? The IPO with its minimal float?

> 6 months is far more than enough time for the market to decide a fair price of an equity.

I disagree.

> The rule change never ended up happening, hence this post. There is zero "cheating", I don't understand why you keep harping on that.

The S&P ended up not making the change. Other benchmarks like the Nasdaq did, and they went way faster than 6 months. The Nasdaq specifically is going to allow these firms to be included after 15 days.

> accurately reflect the market. When S&P rules end up excluding a significant part of the market with trillions

Define what that means? The weights are based on the value of shares available publicly, not market cap. So even if included SpaceX wouldn't even be in the top 20 and have a lower weight than Johson & Johson.

A lot of what people are saying here seems to be based on a misconception of what S&P 500 is supposed to be. Maybe it became the most popular index because of those rigid rules?

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