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"Because the index needs accuracy.", and I would argue that include price accuracy not just inclusion accuracy. The S&P is a benchmark that is designed to refle

"Because the index needs accuracy.", and I would argue that include price accuracy not just inclusion accuracy. The S&P is a benchmark that is designed to reflect a subset of the market, and giving only some companies early access to the benchmark changes the benchmark. So if you want a benchmark that's designed to include all the big stocks regardless of age, profitability, etc then go make a new benchmark. The only thing you need to do is convince others to use your benchmark.

tristanj 3mo ago
"go make a new benchmark" completely ignores how this works in practice. Benchmarks are only useful because everyone uses the same one, you can't swap it out. The S&P 500 benchmark is used as a comparison for trillions of dollars of mutual funds, index funds, and institutional mandates. The further the S&P 500 strays from reflecting the actual market, the more useless it becomes. Also the S&P criteria have been revised multiple times, it's not some sacred unchangeable document.
- ywvcbk 3mo ago
  You want to turn S&P 500 to a total market index. Why? That was never its purpose.
  - tristanj 3mo ago
    No? Where did I say that? The purpose of the S&P 500 is to be the "best single gauge of U.S. large-cap equities". That's direct from their website. I never dispute this. I dispute the fact they claim to be the best benchmark of large-cap U.S. equities, yet have rules that (currently) exclude large-cap equities like SpaceX, OpenAI, or Anthropic.
    - tankenmate 3mo ago
      Sure, but then it comes down to your opinion vs the S&P board's opinion. I suspect (given that there's only been a few days of this getting into the public eye) that more people support the S&P's position vs their critics. But the trade flows will show if people get out of SPX (or SPY/VOO) in the coming days.
      - tristanj 3mo ago
        My issue is that so many people have forgotten the purpose of the S&P 500 index (i.e. it's a benchmark to reflect the large-cap U.S. equity market), and instead treat it as a list of approved companies they should blindly invest their 401ks into. These people do not want to invest their retirement funds into the upcoming IPOs of the overpriced & unprofitable (SpaceX, Anthropic, OpenAI), and then are arguing the benchmark index should not include these companies. But at a fundamental level, the S&P500 index exists to track the market. It was created decades before passive investing even existed. These companies are all large enough to qualify as major members of the index. If S&P started arbitrarily excluding parts of the market they find uninvestable, then that's compromising the integrity of the index, and defeats the purpose of the index entirely. Reading this thread, there is so much confusion happening.
        ywvcbk 3mo ago
        > But at a fundamental level, the S&P500 index exists to track the market No, it exists to track a subset of the market based on specific criteria and weights. It's not even based on the market cap of included companies directly. 'S&P Total Market Index' exists to track the market. > qualify as major members of the index Not based on the inclusion criteria. AND even if that were changed they wouldn't be near the top anyway, despite the trillion dollar valuations initially they wouldn't even be in the top 20 by weight. > and defeats the purpose of the index entirely. The index has operated based on specific rules defining inclusion criteria for a while. Can we just conclude that it did not become the most popular index despite never being designed to track the full market or be based directly on total market caps. After all it's the people advocating the inclusion of these companies are advocating an arbitrary modification to the rules just to get them in.
        tristanj 3mo ago
        The "total market index" point has been addressed twice now. Nobody ever claimed the S&P 500 tracks all equities. Only you keep bringing it up. On your claim that these companies "wouldn't be in the top 20 by weight": as I addressed to you other times in this thread, SpaceX float 1 year after IPO would be 50%, giving it an index weight of $800 billion. That places it easily in the top 20 large-cap U.S. companies. The article linked has a chart of forecast free float. Your claim is false. https://www.economist.com/finance-and-economics/2026/06/01/can-the-stockmarket-swallow-spacex-anthropic-and-openai https://www.economist.com/finance-and-economics/2026/06/01/c... On "arbitrary modification" of rules: every criterion in the index was itself added or revised at some point. The profitability requirement, the float threshold, the dual-class share exclusion then reinclusion. All these rules were modified. If all rule changes are "arbitrary," so are the existing rules. The only meaningful standard for evaluating a rule change is whether it better serves the index's stated purpose. The stated purpose of the S&P500 is to be the "best single gauge of U.S. large-cap equities." A company with a $1.75T market cap that ranks in the top 5 by size in the US is, by definition, large-cap. Excluding such a large company is contrary to the stated purpose of the index.
    - anonymars 3mo ago
      > Where did I say [I want to turn S&P 500 to a total market index]? Right here: > Because the index needs accuracy. If a company is 1-2% of the total US market cap and not included in the index, then the index is wrong right now. If it's not a total US market index, then why is the index wrong to not include it? Edit: and then again here: > But at a fundamental level, the S&P500 index exists to track the market.
- dlenski 3mo ago
  > The further the S&P 500 strays from reflecting the actual market, the more useless it becomes. Here I once again agree with you in part, and disagree in part. The S&P 500 should reflect the actual market. That is, the actual market of publicly-traded companies with legal requirements for transparent accounting and reasonable expectations of future positive cash flows. As you wrote yourself (https://news.ycombinator.com/item?id=48408363 https://news.ycombinator.com/item?id=48408363), "These [mega-cap IPO] companies will likely never meet S&P profitability inclusion criteria for the next 5 years." At this point in time, I don't think it's reasonable to expect future positive cash flows from SpaceX or Anthropic. There are indeed some reasons to suspect that there won't be future positive cash flows from them.

tristanj 3mo ago

"go make a new benchmark" completely ignores how this works in practice. Benchmarks are only useful because everyone uses the same one, you can't swap it out. The S&P 500 benchmark is used as a comparison for trillions of dollars of mutual funds, index funds, and institutional mandates. The further the S&P 500 strays from reflecting the actual market, the more useless it becomes. Also the S&P criteria have been revised multiple times, it's not some sacred unchangeable document.

ywvcbk 3mo ago
You want to turn S&P 500 to a total market index. Why? That was never its purpose.
- tristanj 3mo ago
  No? Where did I say that? The purpose of the S&P 500 is to be the "best single gauge of U.S. large-cap equities". That's direct from their website. I never dispute this. I dispute the fact they claim to be the best benchmark of large-cap U.S. equities, yet have rules that (currently) exclude large-cap equities like SpaceX, OpenAI, or Anthropic.
  - tankenmate 3mo ago
    Sure, but then it comes down to your opinion vs the S&P board's opinion. I suspect (given that there's only been a few days of this getting into the public eye) that more people support the S&P's position vs their critics. But the trade flows will show if people get out of SPX (or SPY/VOO) in the coming days.
    - tristanj 3mo ago
      My issue is that so many people have forgotten the purpose of the S&P 500 index (i.e. it's a benchmark to reflect the large-cap U.S. equity market), and instead treat it as a list of approved companies they should blindly invest their 401ks into. These people do not want to invest their retirement funds into the upcoming IPOs of the overpriced & unprofitable (SpaceX, Anthropic, OpenAI), and then are arguing the benchmark index should not include these companies. But at a fundamental level, the S&P500 index exists to track the market. It was created decades before passive investing even existed. These companies are all large enough to qualify as major members of the index. If S&P started arbitrarily excluding parts of the market they find uninvestable, then that's compromising the integrity of the index, and defeats the purpose of the index entirely. Reading this thread, there is so much confusion happening.
      - ywvcbk 3mo ago
        > But at a fundamental level, the S&P500 index exists to track the market No, it exists to track a subset of the market based on specific criteria and weights. It's not even based on the market cap of included companies directly. 'S&P Total Market Index' exists to track the market. > qualify as major members of the index Not based on the inclusion criteria. AND even if that were changed they wouldn't be near the top anyway, despite the trillion dollar valuations initially they wouldn't even be in the top 20 by weight. > and defeats the purpose of the index entirely. The index has operated based on specific rules defining inclusion criteria for a while. Can we just conclude that it did not become the most popular index despite never being designed to track the full market or be based directly on total market caps. After all it's the people advocating the inclusion of these companies are advocating an arbitrary modification to the rules just to get them in.
        tristanj 3mo ago
        The "total market index" point has been addressed twice now. Nobody ever claimed the S&P 500 tracks all equities. Only you keep bringing it up. On your claim that these companies "wouldn't be in the top 20 by weight": as I addressed to you other times in this thread, SpaceX float 1 year after IPO would be 50%, giving it an index weight of $800 billion. That places it easily in the top 20 large-cap U.S. companies. The article linked has a chart of forecast free float. Your claim is false. https://www.economist.com/finance-and-economics/2026/06/01/can-the-stockmarket-swallow-spacex-anthropic-and-openai https://www.economist.com/finance-and-economics/2026/06/01/c... On "arbitrary modification" of rules: every criterion in the index was itself added or revised at some point. The profitability requirement, the float threshold, the dual-class share exclusion then reinclusion. All these rules were modified. If all rule changes are "arbitrary," so are the existing rules. The only meaningful standard for evaluating a rule change is whether it better serves the index's stated purpose. The stated purpose of the S&P500 is to be the "best single gauge of U.S. large-cap equities." A company with a $1.75T market cap that ranks in the top 5 by size in the US is, by definition, large-cap. Excluding such a large company is contrary to the stated purpose of the index.
  - anonymars 3mo ago
    > Where did I say [I want to turn S&P 500 to a total market index]? Right here: > Because the index needs accuracy. If a company is 1-2% of the total US market cap and not included in the index, then the index is wrong right now. If it's not a total US market index, then why is the index wrong to not include it? Edit: and then again here: > But at a fundamental level, the S&P500 index exists to track the market.
dlenski 3mo ago
> The further the S&P 500 strays from reflecting the actual market, the more useless it becomes. Here I once again agree with you in part, and disagree in part. The S&P 500 should reflect the actual market. That is, the actual market of publicly-traded companies with legal requirements for transparent accounting and reasonable expectations of future positive cash flows. As you wrote yourself (https://news.ycombinator.com/item?id=48408363 https://news.ycombinator.com/item?id=48408363), "These [mega-cap IPO] companies will likely never meet S&P profitability inclusion criteria for the next 5 years." At this point in time, I don't think it's reasonable to expect future positive cash flows from SpaceX or Anthropic. There are indeed some reasons to suspect that there won't be future positive cash flows from them.