This seems a sensible thing to do. If you change the rules on how things end up on your index, you force everyone using that index to reevaluate it. Your index is now perceived as more volatile (and probably is), and all the finance people need to reevaluate the risk of their index funds and decide if it is now 'growth', 'high growth' or whatever bucket it belongs in based on the new risk profile. And then all the portfolios need to be rebalanced. Which all takes time, more time than was being proposed. The sensible thing to do is to create a new index with the new rules.
> <i>sensible thing to do is to create a new index with the new rules</i><p>It depends. Indices aren’t funds. They aren’t meant to balance investor interests. They’re meant to communicate some metric about the market.<p>The S&P tells you how big companies are doing in an index optimized to balance representation against trading cost. So in 2005, float was taken into account for weighting (versus just market cap). This made sense. Also, since the start, the S&P 500 has been a committee-based index. Not rule based. This has made it successful; if you want stable and unchanging, you never went for the S&P 500.
The S&P 500 may not be a fund itself, but Standard & Poor's <i>is</i> a business whose ability to sell services is correlated with the continued relevance of the S&P 500. It absolutely does balance interests - namely, its own - beyond simply being an academic vehicle for communication of a stable thesis.<p>It seems entirely reasonable to say: "if we make a certain decision, we correlate both our reputation and a nontrivial portion of the U.S. economy with the whims of one of the most volatile personalities in industry, and we should likely pay attention to this trial balloon that shows such anticipatory fear of the decision that we might lose our reputation as an index altogether."
> <i>absolutely does balance interests - namely, its own - beyond simply being an academic vehicle for communication of a stable thesis</i><p>As a business, sure. As a committee, it’s still a deeply technical process. I can say with a lot of confidence that optics weren’t considered in any of this, possibly to a fault.
The market cap of the S&P 500 according to Google is ~$65T. Anthropic, OpenAI and SpaceX could well amount to $4T+ in market cap. That's ~6% of the entire index. It's like adding another NVidia. That's a big deal.<p>The rules around index inclusion exist for a reason. Too much control in one person's hands (which SpaceX has), too small a float (so you don't get price discovery), lack of a history of financial performance and minimal trading days just don't give investors confidence and, like it or not, investment decisions <i>are</i> made based on the index. If you want to argue against passive investment, well, good luck with that.<p>I think a lot of people have this weird idea that what we need is some theoretically unfettered market for "true" price discovery when it's actually regulations like this that create markets. It's like a libertarian brain worm.<p>I don't think anybody wants these mega-companies out of the index, specifically. They just don't see why rules that exist for a reason should be suspended when the net effect of that is that investors have less information and there is a lot of forced purchasing. If you have confidence in your IPO, let the market decide what it's worth without trying to fix the price because what they seem to want is for insider lock-ups to end about the time we'd otherwise be getting normal price discovery. Kinda weird.<p>Investor confidence needfs to be managed by creating a stable, regulated market.
an etf that tracks the S&P 500 is what then?<p>This is a big win for many S&P 500 etf holders
They have to be rebalanced every quarter regardless. And I'm not sure how many people would actually sell due to the inclusion of a single company. They're very loud about it, but no evidence that this is causing a significant amount of selling.
At a fundamental level, an index is supposed to reflect the market. If the current market is IPO-ing unprofitable companies at absurd multipliers, the index should reflect that. Because that <i>is</i> the market.<p>The longer major indexes exclude these companies, the further the index strays from representing the market, and the worse they do their core job of tracking it.<p>It's not the index's fault that market is pushing out overpriced and unprofitable companies.
Good thing they're not dropping the profitability requirements. Ed Zitron would be proud.
<a href="https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582?i=1000763228561" rel="nofollow">https://podcasts.apple.com/ca/podcast/the-rational-reminder-...</a><p>Long listen but a very thorough and nuanced discussion by a bunch of smart investment / finance guys in Canada. No click-bait-sky-is-falling content.
Nothing that you are saying here has any commitment to what to expect, is all heresay. It's 100% ad hominem, to the person. That's a fault whether the direction is complimentary or derogatory. I personally really don't want to see vacuous empty comments like this.
Glad there are some grown ups in US leadership
* <a href="https://archive.is/https://www.bloomberg.com/news/articles/2026-06-04/s-p-dow-jones-keeps-megacap-ipo-rules-as-is-after-consultation" rel="nofollow">https://archive.is/https://www.bloomberg.com/news/articles/2...</a><p>* <a href="https://archive.is/15pOn" rel="nofollow">https://archive.is/15pOn</a>
So relieved to see this!
See also S&P press release, "S&P Dow Jones Indices Consultation on Treatment of MegaCap Companies - Results":<p>* <a href="https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-Consultation-on-Treatment-of-MegaCap-Companies-Results" rel="nofollow">https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-...</a>
Note that Nasdaq and Russel did put in place fast entry rules. S&P is the only one that didn’t.<p><a href="https://www.nasdaq.com/articles/new-fast-tracks-account-older-company-ipos" rel="nofollow">https://www.nasdaq.com/articles/new-fast-tracks-account-olde...</a>
Yea, this is great but I'm not sure how much this helps since it's just 1/3 keeping their wits about them.<p>Nasdaq clearly did it for the big bucks and getting the listing, why did Russell bend the knee?
Huge relief. Thank God!
Thank fucking g-d.
Good. I'm surprised, though, that the usual fanboys/stans aren't converging on this to protest how unfair the S&P is.
Good.
The amount of misinformation around this topic was absolutely nuts over the past few days. Good rule of thumb: if a YouTuber or other influencer was pitching doom and relaying this rule change by S&P as a <i>fait accompli</i>, stop following them.<p>(It was a common misconception on this thread: <a href="https://news.ycombinator.com/item?id=48364055">https://news.ycombinator.com/item?id=48364055</a>.)
Contrarily, you can interpret the doom pitches as a necessary political backlash whose degree of panic and whose quantity prevented the change from ending up as a fait accompli.<p>Public decisionmakers do this sort of thing all the time. They "float an idea", "test the waters", "put up a trial balloon". They see what they can get away with. When the decisionmaker has a strong desire for the change, it may only get rolled back if powerful and widespread public dissent makes itself known, as it did in this case. When they don't really care about the issue, they might cancel it at the first sign that anyone has an issue. We can't know their degree of insistence just based on outcomes in these cases.
> <i>the doom pitches as a necessary political backlash</i><p>It was totally misinformed, came well after the public-comment period had ended and had zero net effect other than maybe generating some commissions and management fees for rando managers.<p>There is <i>bona fide</i> hatred for these companies and their managers. Influencers twisted the facts to channel that for views.
What's the urgency to bend the rules? It is not like SpaceX is banned for good. It will be included as soon as it meets the requirements.
> <i>What's the urgency to bend the rules?</i><p>If you’re buying into a tech-marketed fund like the NASDAQ 100 and it doesn’t include a large chunk of the tech market, you’re no longer passively investing in tech. You’re investing in an actively-managed fund.<p>Historically, companies like SpaceX would have gone public earlier and grown into the index. Recognizing that has changed with multiple $1+ trillion IPO contenders makes sense; as it turns out, I think both NASDAQ and S&P decided correctly.
Yeah, but is SpaceX actually worth $1T or does Elon just think that because of how Tesla investors value Tesla?
Not really. The underlying rules for Nasdaq has changed.<p>The preexisting ruleset was used by investors to gauge their portfolio balance.<p>Now investors have to revaluate their portfolio based on the new ruleset as their fundamental risks have changed.
Yeah, the rules have kind of made the passive investment active. I don't understand OPs point at all. I don't understand why we suddenly change the rules and rush things, and OP has provided 0 justification for that.
> <i>You’re investing in an actively-managed fund.</i><p>I see others are listening to the Money Stuff podcast ;)
Oh come on Jump, how can you deny it's not shady?<p>I could kind of agree with the argument that "well these companies stay private longer so they are more mature" but the float exemption with the seemingly arbitrary calculation to figure out weights completely belies that argument.
Do you think that all the alarm had any effect on the blocking of the rule change? Is the right time to complain about a possible change is after it has been decided?
>if ... YouTuber... stop following them.<p>Great advice.
What was the common misconception?
> <i>What was the common misconception?</i><p>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).<p>The top comment and most of its subthreads are run-of-the-mill alarmism.
> <i>The top comment and most of its subthreads are run-of-the-mill alarmism.</i><p>Worth considering:<p>* <a href="https://en.wikipedia.org/wiki/Prevention_paradox" rel="nofollow">https://en.wikipedia.org/wiki/Prevention_paradox</a><p>And the rules for the NASDAQ 100 <i>were</i> changed, as were MSCI and CRSP:<p>* <a href="https://www.schwab.com/learn/story/some-indexes-accelerate-entry-massive-ipos" rel="nofollow">https://www.schwab.com/learn/story/some-indexes-accelerate-e...</a>
Most assets don’t follow those funds. And NASDAQ 100 is explicitly tech focused, I support them making the change.<p>The doomsaying was around most retirement assets. Which don’t follow any single index. But to the extent they do, follow the S&P 500.<p>The market wasn’t pricing in any rebalancing. Commenters were screaming bloody murder about it. In the middle, I’m sure some numpties generated trading and management fees by switching target funds.
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.<p>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.<p>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>Two other indices changed their rules to allow these companies specifically</i><p>One of which is the NASDAQ 100, marketed for decades as a tech-focused index.<p>> <i>Pensions and retirement funds rely on these indices to have continual, stable growth</i><p>Pensions build their own benchmarks. About 10 to 20% of retirement assets follow these indices directly for a variety of purposes. The S&P 500 aims for continuous large-cap growth, but that isn’t true for most indices, which seek to replicate something random.<p>> <i>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</i><p>The NASDAQ 100 has seen practically no net outflows due to this decision. And most retirement assets don’t blindly follow any index, let alone any single one. I opposed the rule changes at S&P. But the catastrophising was made for clicks and views. Not to inform anyone.<p>Like, anyone who actually acted on that brouhaha changed out of an index that isn’t going include SpaceX, incurring transaction fees and potentially tax hits (for non-retirement accounts) in the process, and probably cycling into a higher-fee fund.
> marketed for decades<p>So why change? You're not building a case for why this change is needed. Is there even another Nasdaq 100 company like SpaceX? Probably not because it would be an obvious point of discussion. So now we need to add a new 'thing' to our definition of tech, then change our funds to adopt our new definition. To what end, with this haste?<p>> The NASDAQ 100 has seen practically no net outflows<p>Is it a fund or just an index? If an index, what are you monitoring when you cite 'no outflows'?
> I opposed the rule changes at S&P<p>So you are happy with this outcome, but also so upset at the people that evangelized your preferred policy position that you think HN readers should cut them from the information diet?<p>Seems most likely that the public outcry actually influenced this outcome, so I don't see why the nuances of alarmism about it should nix an entire information source.
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?<p>> That the rule change was a done deal.<p>What are you talking about? The rule has already been changed in the NASDAQ. That makes it a done deal.<p>Anything changed can always be undone, but to be clear it has already happened. That makes it a done deal.
Wrong.<p>HN has been speculating on how wealth would be extracted from 401k and IRAs at least since the November elections in 2024.<p>Far before any influencers even thought this would be a thing.<p>I thought forced cryptocurrency funds, but it turned out to be something else.
S&P wasn't fait accompli, but the NASDAQ 100 was
> <i>S&P wasn't fait accompli, but the NASDAQ 100 was</i><p>Sure. Nobody was properly making this distinction in social media, including on <i>HN</i>. Particularly with respect to the differences in scale and purpose between the NASDAQ 100 and S&P 500.
The fact that a fast track was even considered is controversial IMHO. People flipping out, especially if their retirement is tied up with those indices, is to be expected. No one wants to be a bag holder for billionaire insiders.
Yes, I think given that misinfo this was probably the right decision by S&P, everyone would be saying I told you so and screaming about providing exit liquidity.<p>My prediction is that this will overall end up costing index holders money though. They will ultimately get a worse entry price for SpaceX and the other mega IPOs. Only time will tell.
They might but changing the rules for a highly controversial company would do more harm in lost trusts than gain for investors.
> <i>given that misinfo this was probably the right decision by S&P</i><p>The misinformation was almost certainly not taken into account, and it shouldn’t have been.<p>> <i>everyone would be saying I told you so and screaming</i><p>Influencers will scream regardless. It’s what they’re paid to do. The NASDAQ 100 made these changes and is doing just fine.<p>> <i>will overall end up costing index holders money though. They will ultimately get a worse entry price for SpaceX and the other mega IPOs</i><p>There are lots of indices. S&P largely targets those built around mature companies. If you want a total-market index, those exist and tend to rapidly incorporate IPOs.