Everything You've Been Told About Index Funds Is No Longer True
Posted by freedomforall 2 days, 4 hours ago to Business
Excerpt:
"All of the index companies made changes to their index methodologies just to shoe-horn SpaceX and Anthropic and OpenAI into their indexes. And if valuation still mattered, the valuations at which index fund investors will be buying into these companies will make you want to vomit.
Here is the damage, per Hedgeye:
Rule changes for the SpaceX $SPCX IPO:
Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5.
This forces over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.
Bloomberg Intelligence estimates S&P 500 funds must absorb 19% of SpaceX’s float within 6 months.
Russell 1000 and Nasdaq 100 funds will absorb 24%.
The rules built to protect passive investors:
1. S&P 500 has required 12 months of trading and 4 quarters of GAAP profitability since 2002. Both waived.
2. Nasdaq cut its inclusion window from 90 trading days to 15.
3. FTSE Russell cut its to 5.
All three benchmarks are now structured to buy SpaceX at IPO pricing."
=====================================
This is just one example of what has happened to the stock markets since the early 90's.
Even before that the markets were a scam to let Wall Street steal from Main Street small investors.
"All of the index companies made changes to their index methodologies just to shoe-horn SpaceX and Anthropic and OpenAI into their indexes. And if valuation still mattered, the valuations at which index fund investors will be buying into these companies will make you want to vomit.
Here is the damage, per Hedgeye:
Rule changes for the SpaceX $SPCX IPO:
Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5.
This forces over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.
Bloomberg Intelligence estimates S&P 500 funds must absorb 19% of SpaceX’s float within 6 months.
Russell 1000 and Nasdaq 100 funds will absorb 24%.
The rules built to protect passive investors:
1. S&P 500 has required 12 months of trading and 4 quarters of GAAP profitability since 2002. Both waived.
2. Nasdaq cut its inclusion window from 90 trading days to 15.
3. FTSE Russell cut its to 5.
All three benchmarks are now structured to buy SpaceX at IPO pricing."
=====================================
This is just one example of what has happened to the stock markets since the early 90's.
Even before that the markets were a scam to let Wall Street steal from Main Street small investors.
