[dash2]

I’m seeing a lot of naive optimism about this decision.

The risk S&P takes by doing this is that they will still be forced to buy SpaceX, but a year after everybody else. Given that there is a massive amount of capital that you know will have to buy this stock in 12 months, that itself provides speculative reasons to buy it now.

The indices are in an unenviable position: a race to the bottom. The S&P 500 may be setting up its index funds simply to be the last buyer in a Ponzi scheme.

There is no guarantee that the market will find the “true value“ of SpaceX in the 12 month interval. Markets are frothy and speculative already, and they now have a built in exit liquidity provider.

[3eb7988a1663]

The only decision they are making is to maintain their existing rules. Which is what a slow-moving, conservative financial instrument should do.

S&P may very well end up buying SpaceX, but it will be through the standard mechanism they have been using for decades. Not in a last second bum-rush deal that NASDAQ made to grant special favors.

One year from IPO, the insider lock-up periods will have expired, so insiders who want to get out will have had an opportunity to dump their shares in a risk-based approach without a guaranteed payout from index funds.

[dash2]

Unfortunately, repeating the word “conservative” does not stop you from becoming the last buyer of overpriced stock, which others are buying exactly so they can unload onto you.

[3eb7988a1663]

The non-conservative approach would be to quickly change the rules to avoid missing the latest opportunity?

[dash2]

As I said, the indexes are stuck in a race to the bottom! I don’t like it either.