Doesn't matter, as soon as they can they'll shove it into the indexes, meaning pension funds all over the world will be let holding the bag.

I keep seeing this comment on all these spacex posts, can someone ELI5 to me why the pension funds are going to be forced to buy this? (do they not have free will on what they buy?)

SpaceX made fast index inclusion a condition of where it listed. Nasdaq changed its index rules so that instead of having to wait months to a year, SpaceX can enter an index after 15 trading days.

Index funds track an index mechanically. If you run an S&P 500 fund, you have to mirror the S&P 500. If a company gets added to the index, every fund tracking the index must buy it to match the index -- there is no discretion. Pension funds hold a lot of index funds.

So the causal chain is that pension funds track indexes, indexes have to buy the companies in the index, SpaceX got a fast path to the indexes. SpaceX will launch and pension funds will buy the stock, presumably propping up the stock price.

It would take a lot for pension funds to undo this and would be the opposite of index investing.

And to try and expand on why an index would include a waiting period in it's rules, my limited understanding is it's to give the public markets time to follow the company and review several quarters of financial results to stabilize the valuation in relation to those results before getting included in the index.

That’s my understanding too, it’s for price discovery

By bypassing the rules this way they are making people doubt the security of index funds, which would damage the market just by association. Anyone who cared about the stability of these instruments would categorically deny such a request. It seems to say a lot about the market makers in general that this is being allowed.

If the rule change goes through then SpaceX could be added to an index such as the S&P 500, where many (most?) pension funds invest. "S&P 500 has been considering a rule change to waive the earnings requirement and shorten the seasoning period for mega-cap IPOs like SpaceX." "Pension funds allocate 30% to 50% of their total portfolios to broad U.S. equities [in the form of index funds.]"

A lot of them have rules forcing them to have some amount of exposure to indexes of a market, or all entries in a market.

There are MAJOR rule changes made to allow them to do this (90 day wait-time reduced to 5 days, financial stability requirements lowered or removed), which is why automated rules like that were created ("oh, if they make it to X, they were already vetted for Y, Z").

A lot of people are throwing a lot of trust and reputation on the bonfire to make this happen.

There is some truth to it.

401ks and pension funds have large amounts of money in index funds.

Major indexes like VTI will buy SpaceX after a waiting period as long as it satisfies other rules (and there have been some rule changes in various indexes to make something with low float like SpaceX eligible for inclusion).

However, most indexes are float-adjusted, meaning that they will adjust the amount of shares of a company in the index based on their float, not their total shares. So, they will initially pick up small amount of weight/shares around the IPO.

The NASDAQ-100 has been bending over backwards to cater to SpaceX, which makes some sense because they want it listed on their exchange. They changed their inclusion rules to include a fast-track for IPOs. This type of mechanism isn't uncommon in other large indexes (VTI has had fast-track rules for a long time) but the timing does make it appear that they changed their rules for SpaceX.

Other providers have made changes to float requirements for inclusion.

The NASDAQ-100 (QQQ being the popular ETF tracking it) is also not float adjusted and, instead, has some capping rules for low-float securities. I haven't done any projections but it seems that NASDAQ-100/QQQ will pickup more shares than the float-adjusted indexes.

People confuse pension funds with index funds. Index funds will buy SpaceX once it is added to the index.

A lot of people in the US only have a 401k which is their pension for this discussion (there are very important differences, but for this discussion we can ignore them). In their 401k an index fund is almost always your best investment, so you should be concerned with anything that makes an index fund a worse investment since it harms you.

Pensions have strong and weird investment rules, and you have no control over what they do other than law. This makes them generally a worse investment (but if you live longer than average they are great anyway) so a 401k is better for most.

Thanks for the responses; next question...

in theory, people that do this for a living know this? shouldn't they all be raising the red flags on this, as opposed to say just people on hackernews?

No, because the indices are free-float weighted not cap weighted. The float planned for SpaceX is tiny. If it were purchased by the indices at 1.7T on Monday and went to zero on Tuesday, the amount of value lost by the funds would be barely larger than the normal daily fluctuation of the market.

My question exactly. So far it seems like they are either incompetent or nihilistic, both of which exclude them from my trust.

The big indexes will buy SpaceX soon. If pensions buy big indexes, which they do, they will own SpaceX indirectly.

Pensions buy big indexes in part because of the exact policies that were reversed to let SpaceX in; the behavior is not an immutable law of nature.

OTOH, the changes may expose them to SpaceX before they could reasonably rebalance their holdings, even if they were to stop buying the affected indexes immediately.

I have definitely found my enjoyment of coding in my spare time is lessened now that AI is on the scene. I know very few if any were going to use the code, but it felt like working on a classic car, the act of working on it was fun even if the final results seem like the effort could have been used more productively.

Now, I just feel like I am transcribing a phonebook.

People don't use web tech because they care about quality, they target it very specifically because its one of the places where quality doesn't matter. If your native app crashes, your users will curse your name. Webpage or Electron slop freezes? They'll shrug and restart.

This idea that quality ever existed on the web is ahistorical at best.

They target it because it's the best distribution platform we have, the tech stack is unified, and managing native apps has only gotten less attractive over time. Chrome, the only native app that matters to most users, re-opens your tabs on the rare occasion it crashes. Most native apps are much less reliable than that.

Makes sense, lots of people like Peter Thiel found refuge in Argentina.

Though many more of that type of people in the US.

Adolf Eichmann for one.

> Quite a few have, the issue is that every Jira instance is a fractal shit snowflake of custom properties several layers deep through old failed migrations to new organization strategies.

This is key, Jira is fantastic so long as you have an angry commissar enforcing discipline, otherwise its a total free for all wasteland.

Nobody forced them to build the torment nexus, blaming the authors of Don't Create The Torment Nexus is just silly.

"We would never have created the Torment Nexus if you pesky authors hadn't written so many stories about how we absolutely, positively should not create it."

"It made stonks go up so it was worth it and we'd do it again given the chance."

I hate the Torment Nexus metaphor. Because in practice it involves terminally short-sighted people who apply the aesop to mean "Don't make neural interfaces that enable the paralyzed walking and the blind to see because it was used by the Torment Nexus!" While disregarding that the original story was intended to be an allegory about say, electroshock therapy and neural interfaces were just the windowdressing.

Honestly overdue. A small town lawyer can face all manner of professional sanctions if they screw up badly, but a software engineer can cause untold amounts of social harm and it's all fine so long as they got a few people to click ads along the way.

Am I meant to pretend that companies weren't for years beforehand using RTO to drive layoffs? They are always doing it, AI is just the cover.