[dghlsakjg]

Passive investors and retirement accounts are heavily in on automatic indexing.

This deal has been pushed hard to be included prematurely in the indexes to the point that Nasdaq changed the rules.

The accusation is that these changes were made so that index funds will buy this stock automatically far earlier than they would have previously. Given the… uh… astronomical asking price, it looks like SPCEX is meant for Elon stans and institutional index investors to be the bag holders.

[JumpCrisscross]

> retirement accounts are heavily in on automatic indexing

Majority are not. A minority are, mostly towards the S&P. Most assets remain actively managed, including in retirement assets (which covers 401(k)s, IRAs, pensions, et cetera).

[0xffff2]

Way outside of my area of expertise, but a quick search suggests that exact numbers probably depend on exactly how you define the question, but it would be broadly reasonable to say that the balance is about 50/50 +/-5%, and trending towards the passive side over time.

Would you agree with that?

[JumpCrisscross]

Yes. But I’d caution to not conflating passive investing with indexing to a popular index. They sound similar. But most passive assets index to one of a variety of indices, many of them built in-house by various asset managers. (Vanguard, for example, is famous for doing this.)

[worik]

Yes.

And just because yesterday's rules were "invest in S&P500" does not mean the governors of many (not all) funds cannot change the rules to dodge such blatant fraud

The managers of huge funds are not complete idiots- far from it- and they will do what they can, most of them, to fulfill their duties

[JumpCrisscross]

> just because yesterday's rules were "invest in S&P500" does not mean the governors of many (not all) funds cannot change the rules to dodge such blatant fraud

There are no governors. The assets that automatically follow the S&P 500 are like individual IRAs. If a fund has a governing body, they're generally not indexing to a single narrow index like the S&P 500. They're going for a set of total-market funds, or they're building a custom benchmark.

For the assets that do follow the S&P 500, virtually nbody would be expected to react to these kinds of rule changes. If anything, you'd just create a higher-fee fund that anyone who is upset about this can switch into that equal weights or won't include SpaceX. This is what some RIAs I know in the Bay Area have done, and this entire shitshow has just been a moneymaker for them.

> managers of huge funds are not complete idiots

Zero hedge funds automatically follow the S&P 500, or any other public index, like that. That's sort of the point of being a hedge fund–you're delivering something different.

[worik]

I said and I mean "huge", as in "very big"

Passive index investing was once the best strategy, perhaps is still. But in the face of such apparent malfeasance perhaps no longer

The big pension funds do have governors, they are mostly diligent and can change course

that will mitigate but not eliminate the downsides to this nonsense