From the article, emphasis mine: Here's a TLDR on this from the Reddit Bogleheads sub: In the comment section, there is advice on how to influence this process/decision, but the author says they...
From the article, emphasis mine:
Nasdaq recently circulated a Nasdaq-100 Index “Consultation” (located here). They are officially seeking feedback from investors on proposed updates to their index methodology. But let’s be real: this “consultation” is Nasdaq-speak for letting us know what they are going to force feed us, like a baggy foie gras duck. A thinly-veiled blueprint for how to forcefully transfer wealth from the retirement accounts of passive retail investors directly into the pockets of corporate insiders and early investors.
Both SpaceX and OpenAI are pushing Nasdaq and S&P and Russel/FTSE index providers to waive their listing requirements (including free float market cap, and seasoning) for an expedited listing on all indices. This would mean that instead of allowing several months/a year for 'seasoning' where price discovery takes place and the stock post-IPO finds a fair pricing, index investors would instead be forced to automatically buy these megacap stocks right at IPO with almost zero price discovery and are forced to take whatever inflated prices these companies list at.
I have seen quite a lot of people within the investment community (some small names and some quite big ones too) expressing concern that this is just giving VC's and early angel investors an opportunity to dump massively overvalued, unprofitable startups onto people's pensions.
Is there any hope that we can convince indexes not to drop the seasoning requirements? From now on, couldn't VC's just invest in junk companies, run the private market price into the trillions and then quickly list, dumping it onto people's pensions and taking the money?
In the comment section, there is advice on how to influence this process/decision, but the author says they used Gemini to come up with it and it's unclear whether it's actually viable so I won't paste it here. There is also a link to provide feedback in the document issued by Nasdaq. The deadline passed in February but the feedback form seems to be available still.
Just don’t buy ETFs based on indices that have a fast track rule? ETFs are ultimately just a type of investment fund, one that promises to keep its assets equivalent to an index. If NDX (which I...
Just don’t buy ETFs based on indices that have a fast track rule? ETFs are ultimately just a type of investment fund, one that promises to keep its assets equivalent to an index.
If NDX (which I doubt many people own in their retirement fund) bagholds SpaceX by next year, then it’ll perform quite badly relative to its peers, which won’t do the same thing. Feels like something that’ll work itself out?
I hold ETFs based on indices and I bought them exactly because they’re the index. I can’t just dump and buy something else, the capital gains taxes would kill me.
Just don’t buy ETFs based on indices that have a fast track rule?
I hold ETFs based on indices and I bought them exactly because they’re the index.
I can’t just dump and buy something else, the capital gains taxes would kill me.
Yes, but that lack of performance will still be somebody's money.
If NDX (which I doubt many people own in their retirement fund) bagholds SpaceX by next year, then it’ll perform quite badly relative to its peers, which won’t do the same thing. Feels like something that’ll work itself out?
Yes, but that lack of performance will still be somebody's money.
It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.
If it goes through, they’ll need votes from NDX shareholders, eg the money. At some point you do have personal autonomy with your money. There’s plenty of things you can do - if you own NDX, just...
If it goes through, they’ll need votes from NDX shareholders, eg the money. At some point you do have personal autonomy with your money.
There’s plenty of things you can do - if you own NDX, just liquidate it and buy a normal index fund. NDX is kind of infamous to begin with for being wish-washy with its criteria, and has terrible diversification. Vanguard doesn’t even have funds matching nasdaq indices for a reason.
People are allowed to do dumb things with their money if they wish. Ultimately, if you own NDX, you want high exposure to "high growth tech firms". Otherwise you'd buy a saner, more diversified fund (with a lower cost ratio). I wouldn't be surprised if it does go through, because this is what they want.
In terms of retirement funds, I can't imagine this would have an effect. NDX is not a normal index that your 401k autobuys.
These don't have one currently and they didn't have one when tons of people put their retirement savings in over several decades. I personally have no skin in this game, but that doesn't stop me...
Just don’t buy ETFs based on indices that have a fast track rule?
These don't have one currently and they didn't have one when tons of people put their retirement savings in over several decades.
I personally have no skin in this game, but that doesn't stop me from understanding the unfair, negative consequences to those who do. Out of curiosity: if you had a substantial part of your savings in these ETFs, what, if anything, would you do here? Close your eyes and hope it won't pass, try to sell everything before everyone else tries the same, just sit through it and accept whatever outcome, something else?
ETA: I just saw your edit to another comment where you say this isn't a normal 401K index fund. I was assuming it is, and that similar changes are somewhat likely to go through for S&P500 and FTSE too because otherwise they won't be able to list AI companies (who are not profitable, for one thing) and SpaceX. So you're saying I got this wrong?
What is "these"? It's just NDX that seriously considering it. I don't think anyone has their retirement money in NDX unless they're a real tech-believer, for better or for worse. And if they are,...
What is "these"? It's just NDX that seriously considering it.
they didn't have one when tons of people put their retirement savings in over several decades.
I don't think anyone has their retirement money in NDX unless they're a real tech-believer, for better or for worse. And if they are, they're probably pretty excited about getting SpaceX in there early.
Out of curiosity: if you had a substantial part of your savings in these ETFs, what, if anything, would you do here?
Liquidate, buy an equivalent asset, go on with my day. That's the benefit of ETFs - they have far more liquidity than a traditional investment fund.
The problem comes if you already hold these ETFs in a regular taxed brokerage account. Unfortunately you could be triggering a large tax bill if you do sell and buy some other ETF.
The problem comes if you already hold these ETFs in a regular taxed brokerage account. Unfortunately you could be triggering a large tax bill if you do sell and buy some other ETF.
I’ve tried to do some research on this and what I got is that basically my VOO fund will be forced to buy spacex at whatever inflated price they list shares at on day 5, then existing shareholders...
I’ve tried to do some research on this and what I got is that basically my VOO fund will be forced to buy spacex at whatever inflated price they list shares at on day 5, then existing shareholders will dump the stock and deflate “rebalance it” through the fall come December.
VOO has historically been really reliable though, and I feel like long term selling shares of that is meaningless and I shouldn’t make knee jerk reactions based on the news, however shitty it is.
VOO isn't doing anything. That tracks an entirely different index. SpaceX has been trying to nudge S&P to also have a fast track rule, but it hasn't gotten anywhere, and it's much harder for S&P's...
VOO isn't doing anything. That tracks an entirely different index. SpaceX has been trying to nudge S&P to also have a fast track rule, but it hasn't gotten anywhere, and it's much harder for S&P's entrance criteria to change than NDX.
Vanguard doesn't even have a index fund for NDX or QQQ because they don't trust Nasdaq's indices.
From the article, emphasis mine:
Here's a TLDR on this from the Reddit Bogleheads sub:
In the comment section, there is advice on how to influence this process/decision, but the author says they used Gemini to come up with it and it's unclear whether it's actually viable so I won't paste it here. There is also a link to provide feedback in the document issued by Nasdaq. The deadline passed in February but the feedback form seems to be available still.
Just don’t buy ETFs based on indices that have a fast track rule? ETFs are ultimately just a type of investment fund, one that promises to keep its assets equivalent to an index.
If NDX (which I doubt many people own in their retirement fund) bagholds SpaceX by next year, then it’ll perform quite badly relative to its peers, which won’t do the same thing. Feels like something that’ll work itself out?
Shareholders #1 and all.
I hold ETFs based on indices and I bought them exactly because they’re the index.
I can’t just dump and buy something else, the capital gains taxes would kill me.
Yes, but that lack of performance will still be somebody's money.
If it goes through, they’ll need votes from NDX shareholders, eg the money. At some point you do have personal autonomy with your money.
There’s plenty of things you can do - if you own NDX, just liquidate it and buy a normal index fund. NDX is kind of infamous to begin with for being wish-washy with its criteria, and has terrible diversification. Vanguard doesn’t even have funds matching nasdaq indices for a reason.
People are allowed to do dumb things with their money if they wish. Ultimately, if you own NDX, you want high exposure to "high growth tech firms". Otherwise you'd buy a saner, more diversified fund (with a lower cost ratio). I wouldn't be surprised if it does go through, because this is what they want.
In terms of retirement funds, I can't imagine this would have an effect. NDX is not a normal index that your 401k autobuys.
These don't have one currently and they didn't have one when tons of people put their retirement savings in over several decades.
I personally have no skin in this game, but that doesn't stop me from understanding the unfair, negative consequences to those who do. Out of curiosity: if you had a substantial part of your savings in these ETFs, what, if anything, would you do here? Close your eyes and hope it won't pass, try to sell everything before everyone else tries the same, just sit through it and accept whatever outcome, something else?
ETA: I just saw your edit to another comment where you say this isn't a normal 401K index fund. I was assuming it is, and that similar changes are somewhat likely to go through for S&P500 and FTSE too because otherwise they won't be able to list AI companies (who are not profitable, for one thing) and SpaceX. So you're saying I got this wrong?
What is "these"? It's just NDX that seriously considering it.
I don't think anyone has their retirement money in NDX unless they're a real tech-believer, for better or for worse. And if they are, they're probably pretty excited about getting SpaceX in there early.
Liquidate, buy an equivalent asset, go on with my day. That's the benefit of ETFs - they have far more liquidity than a traditional investment fund.
The problem comes if you already hold these ETFs in a regular taxed brokerage account. Unfortunately you could be triggering a large tax bill if you do sell and buy some other ETF.
I’ve tried to do some research on this and what I got is that basically my VOO fund will be forced to buy spacex at whatever inflated price they list shares at on day 5, then existing shareholders will dump the stock and deflate “rebalance it” through the fall come December.
VOO has historically been really reliable though, and I feel like long term selling shares of that is meaningless and I shouldn’t make knee jerk reactions based on the news, however shitty it is.
VOO isn't doing anything. That tracks an entirely different index. SpaceX has been trying to nudge S&P to also have a fast track rule, but it hasn't gotten anywhere, and it's much harder for S&P's entrance criteria to change than NDX.
Vanguard doesn't even have a index fund for NDX or QQQ because they don't trust Nasdaq's indices.
That's a pretty damn good indicator that what's going on here isn't investment, but gambling.
Ah thats awesome thanks!