Comment by czhu12
11 hours ago
This does seem sensible and I’m glad most of my holdings are in s&p funds.
Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund, if you hold to track broad market performance? Wouldn’t that have a massive blind spot on AI related growth?
Whether or not I personally think ai is over hyped or not, the whole point of these ETFs is to make sure I don’t get a say in the matter, since I’m a terrible stock picker
> Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund
The same downsides as not having giant private companies in your fund.
The new stocks are still going in, they're just going in after a year (the normal rules), rather than 5 or 15 days. The outrage here wasn't that the stocks were going into the indexes at all, it's that they were going in before price discovery, several quarters of earnings, more float, and expiration of insider lock-up periods, which seemed especially sketchy because of the (correct or not) perception that these IPO valuations are inflated and unrealistic. It seemed like they were trying to dump the bag on the public.
It seems the general consensus on HN is that they are overvalued and for sure will collapse in value down the road, I could imagine some frustration down the road if these companies actually become, say, 4T by the time they get added to indices.
There are different indices if you want to be exposed to that risk.
What examples have there been in the past of a company which did all its growth in the 1-year period following the IPO, then stopped right when they were added to the index?
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I'm certain that no index wants to be known as a bubble index. The AI bubble is going to trash huge numbers of industries and wipe out enormous amounts of investor wealth when the music stops. That bubble bursting will make the 2008 financial crisis look like peanuts.
No, because AI is still unprofitable and could even be called a speculative venture given the crazy spending amounts. Let the speculators take the risk and reap the rewards. When profitability and all the other conditions are met, I’m happy for the greater market to buy in at the price the market determines. I think everything is functioning as designed.