- many funds owned by the public will buy this, so people will be indirectly invested and could lose money
- if this affects the economy, it will affect everyone
All investments in equities carry risk of losing money. You also have a choice how much, if any, you are in the stock market and which stocks. As the market conditions change or the economy changes, it is your responsibility to manage your own investments.
Most have their pension automatically track index. Nasdaq changes rules so that the pension funds are forced to buy stock while very volatile and likely overpriced.
I'm willing to bet that most funds will just change their reconstitution process to give themselves a much longer period to add new IPO stocks to their portfolios and end up avoiding most of the drama.
On the other hand if they don't I'm making popcorn because the lawsuits and political fallout if / when this goes wrong is going to be epic.
That's not how pension funds work though. Pension funds are extremely conservative. They invest on horizons spanning decades. They can't just make decisions from one month to the next.
The very short time frame of an index accepting Tesla is the problem.
It's like telling a train "quick, make a right here"
And how do you suppose these rules were originally introduced? Do you believe that the reasoning was particularly solid then, and is it directly applicable in the current situation?
Yes. These rules were introduced, because that's the purpose of pension funds. To invest in very long-term ideas and assets. That's their whole purpose.
I'm not sure if we're debating here about the purpose of pension funds, or their strategy of investing in index funds. The first one doesn't change, the second one, maybe.
Pension funds are perfectly capable of switching to a different product if they don't want index funds that reflect the market. But they do want index funds that actually reflect the market, so they want these rule changes.
The management of those indices is just doing exactly what the vast majority of their customers want.
>What? Absolutely not. They are doing what the President is telling them to do.
This is a paranoid delusion.
These rules were never on particularly solid ground, it's only natural to see them gone when you have significant upcoming IPOs changing the structure of the market. It is the job of these indices to keep up with that.