> This news tanked 5% off the Nasdaq yesterday

No, it did not. The market moved in reaction to earnings misses from e.g. Broadcom [1] and the strong jobs report.

[1] https://finance.yahoo.com/markets/article/broadcom-stock-sin...

and Meta saying they want to issue. Combined with the IPO scramble there's a lot of dilution and raising hitting the same sector in a very short period of time. Can the public markets pony up the cash in the short timeframe? It seems investors said no, or at least the uncertainty was high enough that they trimmed the risk.

> Can the public markets pony up the cash in the short timeframe?

Yes, very easily, American households alone plop a few hundred billion to over a trillion dollars into the stock market every quarter. Whether investors want to is another question. (The answer, at least to the tune of $75bn for SpaceX, seems to be yes.)

What I mean is that investors don't want to pony up the cash at current market prices. They want a discount. Then they will pony up the cash

Just like creditors demand higher rates on investment grade bonds, investors are demanding a higher risk premium if they're going to be expected to keep piling in cash to this particular sector that's diluting and raising.

> investors don't want to pony up the cash at current market prices

I don't think anyone can say this until the IPO goes out. Right now, all we're seeing is discount rates being adjusted market wide in anticipation of a rate hike.

I thought most of those households was massively in debt?

The market moved in reaction to the totality of events that happened in the world all averaged out through the actions of the participants, anyone who says "this" was what happened on any day is wrong. Some days have dominating factors but even if the event is the dominant one, the reason why it has the impact it does might be a 3rd or 4th level effect.

> anyone who says "this" was what happened on any day is wrong

There is never a singular reason. But there are negligible reasons. S&P not changing its rules was a negligible reason for today's tanking.

But how can you quantify that? There is no way to prove it, the market cannot say "I wasn't moved by this, I was actually moved by that and this part was actually just negligible."

Isn't it all subjective in the end because nobody really makes their trades with verifiable notes expressing the exact reason. So we can only guess right?

> how can you quantify that?

Precedent and timing. Rates-related news is always going to massively shift the market, and the market shifting right after the jobs report is a pretty clear signal.

Moreover, S&P holding course wasn't new information–there was zero evidence of anyone pre-trading a rebalancing, which means the market didn't expect S&P to materially change its rules.

Thank you! So sick of people always ascribing the market's movement to whichever narrative headline they pick that day.

Heh. I would not discount narrative so fast. You may not believe it, but it does not mean others don't.

My theory is hedgies and investment banks using semi and ai hype as a liquidity bridge to drop into SpaceX which happens next week.

Arm and AMD pumped to insane levels on basically nothing.

What proof is there for your narrative versus mine?

> a liquidity bridge to drop into SpaceX

What does this mean?

It means financial companies have been illogically pumping semiconductor companies the last 5 months despite the profits, royalties and supply chain being entire worse than a year ago.

They pumped ai adjacent stocks to draw retail in, to provide liquidity now when they are in theory forced to purchase SpaceX.

Effectively getting people to buy semi-ai stocks at a premium to fund their forced purchase for SpaceX.

> AMD is nothing

What?

SpaceX is the hype not AMD guy

I will admit that I am starting to understand Musk's contempt for retail investors. edit: They have no problem lining behind supporting what is now effectively Musk oriented slush fund.

:D The proof for theory tends to be somewhat stable, by which I mean: 'the theory can be tested and produces results in line with what the theory predicts.'

If you are asking why one theory tends to be better than another is qualitative at best, but irrelevant quick. Once the two theories settled in people's brains, it only exacerbated the sell off. In a sense, the theories were irrelevant. Their impact, however, was not.

In other words, I think you have the entire structure all wrong. It is not binary at all. Or, at least, it does not require for it to be mutually exclusive.

You’re prioritising one narrative headline over another though.

That’s a lazy take. My spidey senses tell me otherwise.

The strong job numbers too.

On a side note, I find it very sad that strong job numbers make stock plummet.

It really is an indication that the stock market is mostly speculative and not concerned about the actual economy.

> It really is an indication that the stock market is mostly speculative and not concerned about the actual economy

Not really. Strong jobs numbers in the midst of 3+ percent inflation means rates should go up. That, in turn, dilates time on future earnings. So making a company's future earnings more-heavily discounted will be a net drag on valuations even if the jobs numbers indicate those numbers, near term and far, will be higher.

Yep. Job numbers are the “actual economy” – the actual economy is driven by wages and consumption.

Stronger wages → stronger consumption → higher demand-pull inflation.

But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function.

Central banks intervening with interest rate adjustments is what distorts the prices of equities downward, when inflation rises.

Without central bank intervention, inflation should theoretically push equities higher (a highly-inflated economy driven by rising demand is by definition a well-performing economy!).

Central banks intervene because runaway inflation can be harmful to wage-earners (they save in dollars, not assets).

But I’m not sure if a 2–3% inflation target is ideal. It seems to me that this arbitrarily low inflation target restricts the growth of the economy in ways that might affect wage-earners, defeating the stated purpose of monetary policy, since higher rates also have the effect of curbing job growth as well as raising the cost of servicing mortgages.

> higher inflation implying that “rates should go up” is central bank doctrine

Uh, no. If you have no central bank, more consumption and more employment means more demand for money. Ceteris paribus, that will raise rates.

You're correct inasmuch as central banks quicken this reaction, and–when done properly–dampen it. But the fundamental engine is emergent.

> But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function.

Let's put it this way then: the central bank can raise rates or it can crash the economy into a brick wall. In that sense, rates should be raised. We have the least competent regime in history right now though, so they might choose the latter option.

Agreed about the 2-3% target. Seems like a crazy low target for a country that has been, historically, a strong exporter. Or at least seems to want to be an exporter. I wonder if one of the reasons behind this low target rate is that inflation will ultimately decide how expensive government debt is, since under normal circumstances people will want their bonds to at least pay out enough to cover inflation.

tbh, it makes it even sadder.

It means the entire economy runs on borrowing to fuel growth.

When all that cash is still coming fron QE, it’s gross.

These companies are capex heavy and need to reach into the capital markets to sustain their growth. The cost of capital is correlated with inflation. Why is this the fault of the stock market? Maybe blame the government for diluting the money supply?

> not concerned about the actual economy.

Why would it be? Non dividend stocks only have value because other people think they have value (i.e. greater fool theory).

Only dividend stocks have some base value connected to how well the company does. (Higher dividend if it does well, lower if it does poorly.) But they still also have a lot of "greater fool" value.

Beyond dividend, stocks have no intrinsic value. Nowadays you don't even get a piece of paper to wipe your ass with anymore, it's all digital.

> Only dividend stocks have some base value connected to how well the company does.

That's not how it works. If the company has profits they can distribute it in many ways. Dividends is one, but not a great one because it forces you to pay taxes on it this year. Or they can buy back shares which increases the share price, which is better because then you don't have taxable income on that until you decide to sell. Or they can reinvest that money into the business to grow it, which is the ideal option, although not always possible.

This take makes sense but isn't really accurate. A lot of companies have stock buy back programs in lieu of dividends; essentially, using their cash flow to manipulate their stock price instead of returning money to every investor. Now this doesn't guarantee a particular price usually, but does help push the price up when they are buying a significant amount from the market.

Every time I try to explain this to people I feel like I'm talking to a brick wall. Even more frustrating to hear, otherwise reasonable, market analysts say that "dividends don't matter because the stock value goes down on payout". What doesn't matter is how successful a company is if they don't share their profits. You're literally buying a Pokémon card just with a lot of liquidity until the illusion of value bursts, hoping that somebody will buy you out because P/E improves or whatever.

They do have intrinsic value!

Growth stocks trade on a multiple of earnings: earnings have intrinsic value.

To who? There's no immediate benefit of holding a stock that doesn't pay out beyond voting rights, or a fraction of company assets. As parent said, you're just hoping to sell it to somebody down the line for more. It's speculation. The market is liquid, and a lot of people believe these stocks have value, but it's still speculation.

That's just dividend stocks with more shady. We promise to invest the dividend you would have gotten into ourselves to become more valuable bro. But that will only be reflected in "valuations" that don't directly affect your bank account. It is still the greater fool theory.

The worst is growth stocks that are a wrapper around actual dividend stocks. Beyond number going up, what actual concrete utility are you getting? Beyond waiting for the line to go up to eventually sell it to a greater fool, what can you _actually_ do with it? It's not real.

It is only real because enough people believe it is real. And they believe it because they want to believe it, because they are greedy and want easy money.

Once the market tanks and the greed turns into fear, there will be bagholders and the brokers will be laughing. The people who skim fees and percentages will be cozy.

"Now is the time to invest" they will say, because from here the line can only go up! And it will, eventually, because people want to believe, because they are greedy.

The only thing the stock market makes money on is greed. That is the thing that drives stock value. Not the economy.

> Non dividend stocks only have value because other people think they have value (i.e. greater fool theory)

Alphabet buys back shares equal to the GDP of Uganda every year. There are more ways to return capital than through dividends.

what happens when ALL the stocks have been bought back? what is the natural conclusion? you get extra points if you mention dilution i.e. oops we turned on the ~~money~~ stock printer and your stock is now actually worth less!

> what happens when ALL the stocks have been bought back?

This can't happen in practice. It would require the company's value to fall below the buyback amount, which is itself a fraction of the company's cash and thus value. (Like, yes, I could engineer a weird failing company where this could happen. But that would just be describing a peculiarity of how the company failed. If the company is doing fine, this doesn't occur.)

If you have trouble with a public-market buyback, consider how tenders are done in private markets. You're a shareholder who has the option of selling back your shares. It's a direct way for you to tap the company's treasury as a shareholder. The company's shareholders could vote to distribute all the cash and assets in a buyback. But we have a word for that: liquidation.

Strong job numbers with rising inflation means potential hikes to the federal funds rate which increases borrowing costs which reduces profitability which means stock prices go down. Strange causality chain, but that’s how Mr. Market thinks.

That is what looked like the catalyst but seeing the response made me feel the confirmation from the S&P really was a big factor, particularly because the algorithms must all have been banking on the rapid inclusion for the AI companies which would keep the tech ship afloat at its current valuation. I don’t think the jobs report was enough either, and the market hasn’t really been reacting strongly to ideas about interest rates shifting, I’d say in the current climate them staying the same is priced in about as much as the, changing.

-5%? Oh no panic sell everything now, its so over - Warren Buffet

I agree, but… Plenty? Really?

Just buy the stock or buy a mutual fund which invests in IT, AI, Tech what have you. Sooner or later they will probably also be included in the general index funds.

Exactly. Once they have enough float and has had enough time for actual price discovery they'll be included in index funds like any other large cap stock.

This. This a risk stance where they want to see the performance in 3-6 months. I have no doubt hundreds of funds will buy in but the major index needs to be sure it’s not going to drag down the entire stack with its inclusion.

Exactly. That's what the index funds would have had to do as well.

Yes. Plenty is correct. Fidelity let's you buy SpaceX at IPO with only $2K in the bank.

And there are other reasons to be cautious. Many passive funds don't license the SP500 and instead mirror it with their own synthetic index. They are not bound to respect this decision.

I think caution is most warranted, but I also think it's likely that SpaceX will become a real-life Weyland-Yutani Corporation (i.e. "The Company") of Alien and own space. But I'll be long dead before that plays out.

> But I'll be long dead before that plays out.

Given how that's played out in the movies, I'd be happy about that.

I've always favoured Tessier-Ashpool S.A. as comparable. The creation of AI's and Freeside and Musk's pronatalism slots in nicely.

Musk isn't a natalist. The global population is going up. And yet, he complains about not enough births. Because he is a white supremacist. He wants white people to outnumber other races. The current state of affairs would be satisfactory to him if he were merely a natalist.

Source?

For which part?

Global population increase: https://www.worldometers.info/world-population/world-populat...

White supremacist: https://www.theguardian.com/technology/2026/feb/12/elon-musk...

https://www.youtube.com/watch?v=-VfYjPzj1Xw

https://www.ms.now/rachel-maddow-show/maddowblog/as-elon-mus...

https://www.cnn.com/2023/11/17/business/elon-musk-reveals-hi...

https://religiondispatches.org/2026/01/09/musk-endorsed-whit...

and so on and so forth

The population is very hard to count, believe it or not. In many places, the birth rate is well under replacement and in the others it's dropping quickly. Furthermore there's widespread fraud and deliberate miscounting which also makes it hard to really know.

So let's get this straight, you think the global population is not going up?

> In many places, the birth rate is well under replacement

Of course, in some places, this is true. But not globally. We don't need more births to keep population going on. There's a surplus of starving, fecund people globally. Musk amplifies and composes tweets about how white people are going to be a minority (we have been for basically all of human existence, but w/e), and he's even said things like if white people are a minority, we will all be killed. Which only makes sense if the assumptions underlying this claim are that white people are uniquely non-violent (i.e., supreme). Or it's an admission that everyone commits genocide against everyone else. Which is so transparently fictitious that someone as allegedly brilliant as he is couldn't possibly believe it.

The most generous description of him is that he's dumb. The least generous is he's a white supremacist.

> the same passive strategy they always have

You'll be shocked to know they have changed the inclusion rules a number of times.

I suspect if in 12 months these megacaps are still megacaps, they will revisit the profitability rules. It's hard to have an index with 500 of the largest, most significant companies leaving out companies with trillion dollar market caps.

My personal photography blogging business has a market cap of a trillion dollars too.

I have 1 trillion shares, and I sold 1 to a mate for a dollar.

Total company revenue is like 50 bucks a month and profits are nil.

Can I be in the S&P 500 too?

Anthropic has raised $130B. It's a bit more than selling a share to your mate for $1.

Yes, it's like selling a share to a group of mates who hear from their mates that AI is hot so they want in. Still does nothing for the profit not being there to pay those investors back in any other way than via new investors (ie pension funds).

There should be a word for paying investors with money from other investors

Seems structurally sound, kind of like a pyramid.

Depends a lot on which end is pointing down.

A reverse funnel

Also, which way down is.

Is it when X is clearly engaging in creative financial engineering with a goal of maximizing their value.

It’s a list of the 500 largest profitable companies. Gotta make some bottom line $$$ to be included. At least that’s how it’s worked in the past.

It also used to require 15 railroads, but the market moved on. They held tight on the profitability requirement with TSLA and missed a huge part of the growth. They may continue to hold the line on that going forward. But, if the AI companies grow their market caps, it's going to be hard to point to the S&P 500 as representing the most significant companies in the US market when trillions in market cap end up no represented.

Of course this all becomes moot if all the companies crash out. I don't think enough people are asking what if these companies don't crash out though.

It becomes moot if even some of the companies crash. If you try to say it works if some of them crash because some of them didn't you actually get that XKCD "Nobody has won the US Presidential Election without..." silliness. "OK, the rule should be you have to be profitable OR have an HQ in a city with two vowels in its name".

Did it really used to require that you own "15 railroads" ?

The commenter is likely referring to the original S&P 90, which mandated a certain number of stocks in different sectors. At the time those numbers were 50 industrials, 20 utilities, and 15 railroads. The breakdown shifted as the economy changed until the 80's when they did away with sector quotas in favor of rules closer to today (basing allocation on market cap).

Regardless, the S&P 500 also excludes a company like Microstrategy (the company that holds Bitcoin) from their index, had excluded Robinhood for a wile due to missing the profit requirements, and so on. It was never "meant" to cover the 500 largest companies by market cap, and has generally resisted pressure to change that.

Oh! That explanation makes a lot more sense, thanks.

Thank you for explaining. People talk about the S&P rules like they are written in stone. There's so much emotion around these exact companies and not the structural shifts that may cause the S&P to adjust its rules. For example, for a time they banned dual class share companies, which would have banned Google from entering today (they were grandfathered on). A ban which they reversed 5ish years later.

They have resisted that pressure historically, and remained fairly conservative. But if these companies stay in the 1T+ range, that's an amount of pressure they have not had in the past. You also missed one of the largest exclusions for a time for profit reasons that's also relevant here - TSLA.

Seasoning and profitability rules are why S&P does not have as steep of a drawdown or as long as a recovery as Nasdaq over the last 30 years of market performance.

The S&P recovered from Dotcom bottom in ~7 years while the Nasdaq-100 took 15 years. Likewise Nasdaq took 3.5 years and the AI hype to recover back to its COVID highs in 2024 while S&P had the same recovery in about 2 years.

This is the downside to Nasdaq having higher returns in tech bull markets.

So the indices have a very different volatility profile by design, we should be happy to have the choice rather than have them all converge to the same product.

This thread should be marked as dupe. But ChrisArchitect seems very picky...

Previously: "SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P" - https://news.ycombinator.com/item?id=48405718

I get what you're saying, but I think there's a contradiction between wanting to be a passive index-fund investor and having opinions like that. The core tenet of index investing is that the market knows better than you.

Plenty of active funds also give you roughly market returns, and it's not very difficult to do the same if you're investing for yourself. The important differentiator for index funds is that they have extremely low fees and take up none of your time.

That's simply not true. The core tenet is to buy mechanically according to some rule. Many indexes are not "the whole market".

They appear to know more than you, too. They know not to change rules that have protected their investments for a chance to get into a risky bet on the ground floor.

The S&P 500 has had these requirements for decades and the approach has worked. This is really a statement that they aren’t going to change what worked so that a few billionaires can manipulate it.

You'll eventually get exposure to it when it gets added in 12 months. Unless there are better profitability criteria. Ultimately it's all about market returns. If other indexes add it and outperform then eventually money will shift to those funds that do better.

It's not just about returns, it's also about risk. The role of a passive index fund is to be a passive index fund. If the s&p starts chasing returns, that will reduce its utility to the market. You get higher returns by being compensated for risks that passive investors/retirement funds don't want to take. And active investors use the S&P and similar indexes for the specific risks and asset class exposures they provide. You might think the economy is going to do poorly which would be good news for some company that's anti-correlated with the economy but you need to hedge that bet for if the economy does well, so in addition to buying shares of whatever that company is you buy into some market reflectiong mix of stocks bonds etc. The role of that hedge is to have a counterbalancing asset that moves opposite your primary bet to reduce volatility, and the role of the s&p 500 is to broadly reflect the american large cap publicly traded stock component of the market. If the S&P 500 begins behaving unpredictability to chase returns as an index then buying funds that track that index is no longer doing what you need it to do. S&P index loses utility, active investors just use some other index, but passive investors with 401ks locked in to tracking the s&p are suddenly forced to buy whatever bet the index creator is making en masse driving the stock price up. That's not a good outcome for anyone except the company muscling their way in and anyone that was somehow rewarded by that addition

What do you mean "better profitability criteria"? I don't want an index to exclude companies on the basis of profitability. I want it to hold the market.

(I also don't want them to create special exceptions. The S&P 500 has pre-existing inclusion criteria, and I'm glad they're sticking to their rules.)

> What do you mean "better profitability criteria"? I don't want an index to exclude companies on the basis of profitability. I want it to hold the market.

OK, then put your money in VTI/VTSAX instead of a S&P 500 fund. I own some VTI and also some FXAIX, you can do the same thing and choose which index to buy.

Every index has criteria, usually somewhat unique, or there would be no marketable difference between them?

> money will shift to those funds that do better

I'm not disagreeing that people invest this way, but I'd like to point out that past performance does not imply future performance, and that investors should consider factors other than just past returns.

You’re assuming their success is a done deal. But there is a large amount of risk in these companies.

Any individual can buy as much as they want.

I think it will be longer than 12 months, if ever.

> To join the S&P 500, a company must demonstrate positive GAAP net income in both its most recent quarter and the sum of the trailing four consecutive quarters

I don't think they ever got profitable for 4 consecutive quarters, if you count xAi.

Anyway, if other indexes add it, and it fails spectacularly, money will shift to those funds that do better.

I'll take consistency over temporarily high returns that require you to time the market

After 12 months the market will have sorted it out. They can’t fake it with investment banker tricks for that long.

How long was Enron able to fake it, out of curiosity?

Tell that to r/gme

More like tell that to /r/tesla

Yeah but the point is, after 12 months we’ll know the real price. Right now it’s just a ponzi.

More than likely none of these AI companies will exist 12 months from now. Their carcasses will be devoured by entities with enough money to buy up the scraps after the bubble pops and the market implodes.

Neither SpaceX, OpenAI or Anthropic have a future. What's a shame is that had Elon not merged SpaceX with xAI it might've actually had a future - but he had to go and ruin it.

What an idiot.

The end is near!

> Ultimately it's all about market returns. If other indexes add it and outperform then eventually money will shift to those funds that do better.

That's like saying that if Nvidia performs way better than an index fund, then the index fund will shift to consist only of Nvidia.

In any given year, there are plenty of index funds that outperform the S&P 500. They don't freak out over it.

S&P 500 is volatile over 5 years - I'd argue even over 10 years (see the charts at https://blog.nawaz.org/posts/2015/Dec/pay-down-mortgage-or-i...). The whole point of investing in it is for much longer windows.

So yeah, perhaps after 10 years they'll change once they'll see other index funds doing better, and have data to back up that in the long term, early inclusion didn't hurt.

Well it’s just the S&P. Other big indices may include it eg the Russell 3000. But it’s not quite as big of a deal as it seems because the market cap on which they scale is the float not the whole value of the company.

Thanks for pointing this out!

It seems obvious in retrospect, but the fact that SpaceX will be "valued" at $1.75 trillion after the IPO is irrelevant when only $75 billion worth of its stock will be publicly traded.

$75 billion in float-adjusted market cap puts it around 180-190th in the S&P 500. So sure, it will likely get in there eventually, but there's no rush to bend the rules to get it in right away.

Wait until you hear about float multiple Nasdaq is doing.

Spoiler alert - it's 5X for this.

Same here. I was so upset about the prospect of my index funds / retirement savings being force fed 100X revenues investments in large size that I emailed my Representative and both Senators. And to add to the irony, I used ChatGPT to help me write these letters.

Then move your savings into some other vehicle instead.

If only! Many people have limited options for investing based on their employer's allowed plans that match 401k contributions

They’re usually mutual funds managed by a brokerage or a company like Vanguard. Those funds often will have different management strategies than S&P 500.

If it's not in a tax sheltered account that can generate a large tax bill.

Russel 1000 will include it in 5 days. Nasdaq in 15 days.

It reads like greed and corruption to me.

Agreed. S&P 500 needs to be seriously gatekeeped. We need safer boring companies in there thatbhave been peoven over a long period of time. Nothing against these companies but they are not proven and ready for S&P 500.

What you're describing is closer to the DJIA.

Let's say Alphabet shifts further to ~become a 100% AI company in the same way that Anthropic and OpenAI are. Should they be removed from the index? If not, why not?

The logic isn’t the same. We’ve had plenty of history to judge Alphabet’s financials. It’s less about AI and more about allowing the market to appropriately price the stock after seeing their filings for a period of time.

The financials will be very different when you start doing something entirely different, with all your might.

I think it would be reasonable to consider moving a company making large changes like that into some kind of probationary state, and automatically adjust the weights it has in the index as a result.

This is true, and it's why index trackers exist, in order to diversify risk across the market so an investor is not excessively exposed to that happening for particular stocks. The market then re-prices that stock. As an index fund investor you are outsourcing your discretion to other market participants.

However the market hasn't priced these new stocks at all, the existence of index trackers is being exploited to force prices on enough buyers to make the prices stick. This is the wrong way around. It's market manipulation. It's using the behaviour of index funds to influence prices, decoupling those prices to at least some extent from the discretion of market participants.

Let the market price the stock, then the index trackers can buy in, this is exactly why these rules exist, and why it's a travesty that the NASDAQ is waiving them.

An IPO can be a very volatile moment for any stock. This isn’t about AI so much as it is about an unproven company h th at is actually losing money right now.

Not the same comparison. Alphabet/Google has a solid 25+ year history. It's not 100% AI or not. It's about a Healthy and proven business model.

Alphabet has decades of financials and is the most profitable company in the world.

If they then stop fulfilling any of the inclusion criteria (profitability, say), they should be removed, yes. Isn’t that obvious?

No because profitability is only required to enter not to stay.

Yes.

Yes.

I don't want my life savings tightly coupled to a young and hyped up technology which is currently being wielded in the most antisocial way possible.

Simple as.

Forget AI. Any company in the S&P could set fire to their entire business in a pivot to Labubus.

A certain amount of required scrutiny and experience derisks that possibility. Also remember pre-IPO the valuation isn't set by the broader market, so you don't know if any of these valuations are even real. Do we want to set a precedent where banks can put any price tag they want on pig everyone is forced to buy?

Once these companies go through the same process Google or any other S&P member did, they're welcome to join the party.

The reasons we have Google in the index and not Anthropic are many:

1. Google has a history of profits. Their move into AI isn't coming at the expense of Search Ad revenue, and can be seen as defending it for the future. Their last annual report shows continued growth in this sector. So the P:E ratio isn't NaN.

2. Their stock prices has survived the test of market trading and multiple reporting windows, short sellers, WSB regressive behavior, etc. In part because they have a huge publicly tradeable float.

3. There isn't a huge bundle of shares in lockup until six months after the IPO that would put selling pressure on the symbol.

It's also a safer bet as a company, though that technically shouldn't be the criteria for indexing:

1. Google has a diverse product line: youtube subs, search ads, adwords, cloud services, etc. And a demonstrated ability to launch more (probably too many more).

2. They have a huge existing customer base to upsell to; cost of customer acquisition would be low for quite a while.

3. Anthropic and OpenAI are dependend on nvidia to supply them every beefier chips, while Google has their own TPUs to run on and lease out to others.

Its cool. I will buy. And you will buy in 12 months.

When we interviewed a financial planner in 2024, I specifically asked for her take on AI companies. It was a trick question. If she was bullish, we'd have walked. She had a good answer about investing in companies that are established and have stakes in AI companies, such as Microsoft.

I'm greatly relieved that at least one major institution in the markets is showing restraint and exercising caution. I'm also a little surprised at the rationality given what we've seen in the past year or so.

Problem is, most of the other indices have not done what S&P chose for the S&P 500. So if you have money in a NASDAQ, Russell, or FTSE index, you're going to end up with money in SpaceX. Even the S&P Global Index seems likely to include it.

The whole thing is disgusting and the financial sector should be collectively ashamed of themselves.

I mean as a passive investor this stuff should terrify you. You're learning that your "passive" is actually quite active. It's why people suggest VTI over VOO/SPY for "true" passive.

If you want to be active then keep your positions but just know and accept the active label.

> I want the indices to follow the same passive strategy they always have

Okay? But the debate has been specifically about getting rid of new rules introduced in recent decades as they're incompatible with the purpose of the indices in the current situation.

"Your 401K Is Their Exit Strategy" - https://news.ycombinator.com/item?id=48433705