So, the inclusion rules are basically "these are the hard limits that specify which stocks are eligible, unless someone really big and lucrative comes along, in which case it's whatever and we'll just adjust the rules to make them eligible"?
it's just a generic dismissal, a way of putting someone in a box without actually engaging with anything they say. which lumps it in with 90% of all internet arguments really. "Your argument must be invalid because you're the type of person whose arguments are invalid."
my account is 11 months old, which invalidates your theory that i'm part of some recent influx. also is septemberism still a thing? i thought that went away when most people had home internet rather than getting it through a university.
What do you mean? I was under the impression that including SPCX has been massively beneficial for Nasdaq. It creates lots of trading volume and sends a quiet signal to other massive tech companies looking to IPO to come to them, rules be damned. So they're definitely extremely lucrative for Nasdaq.
Having the stock traded on their board is good for them. They also maintain an index. Elon made inclusion in the index a prerequisite for trading the stock on the board.
> Elon made inclusion in the index a prerequisite for trading the stock on the board
Source?
He may have claimed this. But he has no power to. Once a stock is publicly listed, every exchange can trade it. Where Musk had influence was on to whom he paid his listing fee.
"SpaceX stock is expected to be listed on the Nasdaq. To secure such a high-profile listing, While listing requirements remain unchanged, Nasdaq recently amended its index-inclusion rules to accommodate companies like SpaceX when they go public."
Notice a listing on the board and an inclusion in an index are two different things. Nastaq changed the index to secure the listing of SpaceX on their board.
In this case I think it is, because they're talking about whether a particular deal with be lucrative for one particular company named Nasdaq Incorporated.
Much like how Wile E. Coyote is a "safe" customer for Acme Inc, even though he purchases dangerous explosives and deploys them in reckless ways.
I think the rules are there are hard limits unless a multi-trillion dollar company IPOs with a significant absolute float, in which case tracking the "market" obviously includes said company.
A stock index is a business model. The concept of "passive" investing is alluring because you don't have to do any work. However, choosing a proprietor of a index that actually looks out for your well-being is, arguable, always relevant.
We are now at the point where companies can game the system of indexing. Investors need to wake up to this fact and realize this is likely a paradigm shift.
If the underwriters of a fund based on an index are involved in manipulating the content of the index, they are effectively the managers of a managed fund pretending to be an index fund.
Yeah, this is correct. There are so many large multi-trillion dollar companies coming to IPO, which if your are passive index holder and you are trying to track the market it is correct for these companies to be included. And besides SPY has chosen not to fast track where QQQ has. It is a free market, and folks are free to NOT buy QQQ. So I'm not sure why this is a point of debate.
"People" in this instance aren't always informed buyers. Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing.
The normal seasoning period is there for a reason. There is a massive downside to premature inclusion of a stock that is initially overvalued and then settles to a reasonable/sustainable value.
> Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing
Then they should buy a broad-market fund. The kinds in which new issues are a tiny fraction or, if it’s following something like the S&P 500, not included at all. Following the Nasdaq 100 and then complaining it has too many risky tech plays is a bit silly.
My (non-motivated, don't have NASDAQ or SpaceX) take is that isn't this how these funds are supposed to behave? You buy NASDAQ if you can take risk, S&P otherwise. If you check out what companies are in the NASDAQ, it's not like it's not majority tech, of which a lot of them are AI-based, so adding SpaceX to that mix is reasonable - and if they waited a year or so for price discovery, and had SpaceX been a popular choice (still can turn out like that), then investors would've missed out on those gains.
Yes, and there are tiers of risk. What people are complaining about is that with the recent behavior, NASDAQ has arguably increased the level of risk involved. If it's as simple as "buy NASDAQ if you can take risk" then that would imply it should pull in meme stocks when the WSB crowd are doing their diamond hand thing.
> the inclusion rules are basically "these are the hard limits
The inclusion rules for indices change every couple of years. That’s why there is an index provider versus a mathematical formula. (There are also formulaic indices. They aren’t very popular.)
My comment never says the rules are set in stone permanently - only that every stock needs to abide by the current set, unless there's enough money in play in which case the rules are edited then and there to specifically accommodate that company.
> unless there's enough money in play in which case the rules are edited then and there to specifically accommodate that company
The Nasdaq 100 rule change covers multiple companies.
Like, there is so much wrong with the SpaceX IPO. It’s kind of weird, as someone who’s spent time in both the equity capital markets and private markets, to see this being the thing finance Twitter has fixated on.
> The Nasdaq 100 rule change covers multiple companies.
I don't think that's relevant to the point you're responding to there. A rule change can apply to many parties while the content and timing nonetheless target a single player. The two things aren't at odds.
We're living under true capitalism right now. Look at the incentives. I don't see how we could have progressed to anything besides this, this is the natural outcome of the system in place.
American libertarians often imagine some kind of wonderland capitalism where everyone agrees to play by the rules that aren't enforced by anyone. To my knowledge this has never existed as a long-term equilibrium and it can't exist. I've yet to meet anyone who can tell me how their imaginary ideas go up against claims like
1. Encouraging infinite growth with no controls or limits will always lead to monopolism and is a one-way ratchet
2. Power vacuums are always filled (no public government leads to private companies stepping in and taking the dictatorial role, this time without any of the democracy)
The answer is that most libertarians see both 1.) and 2.) as a good thing they want to achieve. They imagine themselves benefiting as a high profile worker of that monopoly or rule setting company.
Also, note how super ok and welcomming libertarians are toward racists or even fashists. They do dislike pro-democratic center groups, they hate democratic left.
The United States is far more socialist than capitalist and it’s not close. In the early 1900s the federal tax rate was 0. Now we spend 125% of what we bring in in taxes. That is definitely not capitalism. That’s not a free market, that is the government spending far beyond what’s even feasible
What does the relative level of government spending versus taxation have to do with whether businesses will self-regulate? You're just spewing non sequiturs here.
> socialist than capitalist [...] federal tax rate
My dude, you're acting like Federal government is the only government that matters. It's a common mistake, but in this context it's fatal to your argument.
It's fatal because federal spending is the least relevant kind, since so much of it (and so much of its growth) is for the military, and military spending indicates very little about whether a country is socialist or capitalist on the inside.
In contrast, state/local taxes and programs are--even today--still a majority of the spending that actually tells us anything useful for a socialist/capitalist spectrum, the stuff that involves schools, libraries, policing, homelessness, property rights, etc.
The term "capitalism" was literally only created for the purpose of writing criticisms of the (then) current system of markets/trading/taxing/investing.
Try actually defining capitalism in a way that doesn't apply to basically any random society since the dawn of agriculture.
Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society we have written records for.
The formalization of the process of buying shares in a company and receiving dividends/profits as a result is a bit newer, but the general concept of "I give you money, you use it to make something and sell it then give me money back" has been around for roughly the same amount of time as currency itself.
Anyways, my point is that there is a lot of things to criticize about our current world/economy, using the term "capitalism" while doing so is too vague to be useful in any way.
(Communism/socialism does have more of an actual definition, but very few people are aware of or use it, so it doesn't help all that much).
Saw an interesting discussion on how capitalism has existed for as long as markets have existed, including ancient Greece, and how it inevitably leads to wealth inequality, monopolistic behavior, unsustainable resource extraction, and all the other negatives we see today. The only difference is that in Greece, all of these negatives would have been applied locally but now they're all being applied globally. Instead of one super-wealthy man being a pain in the ass for the local Athens economy, he can now ruin things for everyone everywhere.
> Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society we have written records for.
That's a market economy, which may or may not be capitalist. Markets have existed for thousands of years under various economic systems.
Agree on your other points though, 'capitalism' was coined to just describe and criticize the system they saw emerging, one of private ownership of the means of production, combined with wage workers who do not own their tools or the product of their labor, but instead sell their time.
But its hard to have discussions around because too many people conflate "market economy" == "capitalism" but you can have markets in a feudalist, socialist, communist, any other society, that doesn't inherently make them capitalist. But I still think its useful as a term, but only to specifically describe who owns the capital.
Empirically this isn't true. However you feel about "true" capitalism vs socialism, countries underpinned by capitalism have prospered, even the socialist flavors (China, Scandinavia)...while the countries that have attempted pure socialism have all failed.
The problem with that logic is you're treating economic systems as if they all exist in a vacuum, and you're setting up a circular argument of if its successful its actually because capitalism, if it fails it must have been socialism.
It completely ignores the decades of external hostility toward any nation that attempted to build a socialist economy. Almost every attempt has been met with near immediate intervention from captialist super powers, particularly the USA. Nixon activeley worked to cause the military coup in Chile, Cuba has faced the longest trade embargo in modern history (and yet still managed to outperform its peers in the region in healthcare and literacy). Its unscientific to attribute these struggles purely to internal failure when they are subject to deliberate economic warfare.
Secondly, your definitions are being stretched to fit your thesis. Scandinavia is not "socialist flavored" it IS a social democracy, with free markets. Claiming China's success is from captialism is ignoring that its economy relies entirely on state owned land, state owned and controlled banks, and state owned companies, and mandatory five year plans coming from the state.
If we classify any successful state-led initiative as "capitalist" and any blockaded, intervened upon state as "purely socialist" then the argument is an unfalsifiable truism.
Where does capitalism mandate corruption? Yes, it is not realistic to assume there is no corruption, but capitalism in and by itself does not mandate corruption.
Obviously this all falls apart when capitalism can buy legislation. We are seeing how the USA is currently eroded by a few oligarchs.
They're not saying it 'mandates' it as law, but that the systematic incentives inevitably lead to corruption. The ability to buy government is irrelevant - this is just the easiest method right now of converting money into power. If there was no government to buy, private business would execute that conversion themselves by ruling over people and enforcing their wishes directly.
"capitalism" was meant to harness the greed in men- they're self-assembling groups on mostly level playing fields, and the people vote during every purchase. The more votes they get, the more opportunities to expand. Only when the people fail to choose wisely is a governmental body supposed to come in and help "regulate". The other option is the government decides from on-high how things should work, and you'd better hope that what got them to power was good. Then these people need to be wizards at allocating labor, research, and benefits.
Crony capitalism is true capitalism. The idea that capitalists will simply choose not to organize to benefit their own positions out of some sense of altruism is insanely naive, and puts you in the same camp as USSR apologists claiming that their issue was the lack of true communism. A system that fails when people subvert it to their own benefit is a system that fails.
The power of who lives, dies, and what's allowed are made by the individual consumers (or groups of consumers), so it's the same problem we have with democracy.
> The directors with of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own
You could make a decent argument that capitalism will very likely end-game devolve into crony-capitalism as it's typical failure mode, but I don't think it's written in stone.
It's funny to me. Everyone rails about Atlas Shrugged being some libertarian fantasy story. I always read it as an allegory warning about crony capitalism and how it ruins society along with a story about trains and magical perpetual motion machines.
Socialism capitalism, history shows basically all human systems devolve into corruption regardless of how sound the underlying concepts are.
Which I’m surprised people don’t point out more. What does it matter which system is the best when at the end of the day the powerful people are going to make back room deals to subvert it and that always leads to a feedback loop
Yep. This is how I view the world these days too. All systems will inevitable devolve into corruption and centralized power. The best system I suppose is the one that starts with the most distributed means of power possible, and then that gives the most quality of life years out of anything before it's time for a horrific reset again.
The best way to sort this out is to have truly random election winners and heads of organizations and bids for govt contracts. And yes, you must have enough numbers in the input for random selection.
If a Pvt corporation fails to deliver a bid or lies in customer features, then CEO is caned (Singapore style) and taken out of the next pool for random selection.
If a politician fails to deliver an election promise in his term, then politician is caned and taken out of the next pool for random selection. Randomly selected judges decide the severity of crime and magnitude of punishment.
In practice the choices tend to be limited for a lot of the people for whom this rule change was meant to ensnare their money because it exists within 401k plans with limited portfolio options.
Right but that's because you've now layered in government control. 401k plans are more heavily regulated, often negotiated by the employer rather than the employee.
The real question is why are employers able to limit employee 401k investment choices and employee health insurance. This is not freedom.