alt Hacker News> What was the common misconception?
That the rule change was a done deal. The pitch was some shadowy financial cabal forcing everyone’s retirement savings into SpaceX (which would not have been true even if S&P voted to include, but that’s a separate topic).
The top comment and most of its subthreads are run-of-the-mill alarmism.
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It seems to me like there's a fair amount to be concerned about, I wouldn't consider myself an expert on finance by any means so if you have some explanation of why it's not that bad I'd love to hear it.
Two other indices changed their rules to allow these companies specifically. Pensions and retirement funds rely on these indices to have continual, stable growth. Often the people whose money is being invested don't even have control over its allocation into these funds.
Coupled with the precarious state of the economy due to all the money already flowing through AI, changing the rules to throw retirement fund money into brand new extremely highly valued stocks with P/E ratios in the hundreds seems like a recipe for disaster. It reminds me of subprime mortgages.
I mean S&P had actually drawn up a lot of the changes, regulations, and paperwork for entrants, so it wasn't a done deal, but they absolutely were considering it, and it was a very real "risk".
>> What was the common misconception?
> That the rule change was a done deal.
What are you talking about? The rule has already been changed in the NASDAQ. That makes it a done deal.
Anything changed can always be undone, but to be clear it has already happened. That makes it a done deal.
> The top comment and most of its subthreads are run-of-the-mill alarmism.
Worth considering:
* https://en.wikipedia.org/wiki/Prevention_paradox
And the rules for the NASDAQ 100 were changed, as were MSCI and CRSP:
* https://www.schwab.com/learn/story/some-indexes-accelerate-e...