Tesla finally added to S&P 500 - Concerns from Reckenthaler

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CurlyDave
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by CurlyDave »

willthrill81 wrote: Sat Nov 21, 2020 11:14 am
CurlyDave wrote: Sat Nov 21, 2020 10:16 am
TravelforFun wrote: Fri Nov 20, 2020 1:01 pm
...This applies especially to the Robinhood crowd.
Criticism of the "Robinhood crowd" is fairly common around here.
That's because it's pretty clear that the overwhelming majority of trading done on that platform is for individual stocks, which BHs rightly eschew. It's one of the most closely held tenets of BH-ism.
I understand that part, but it seems to me that since we can't outlaw that behavior we have to learn to adapt to it. Or maybe not adapt. But evolution tells me that if we don't adapt we will become extinct.
Northern Flicker
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by Northern Flicker »

Xrayman69 wrote: Sat Nov 21, 2020 9:46 am
Northern Flicker wrote: Sat Nov 21, 2020 1:13 am Every stock in the S&P 500 today, except those in the index when it was launched in its present form in 1957, were added at some point. It is just a normal part of index maintenance and governance.
S&P adds companies that are on the ascent and shed companies that are on the descent. Push and pull and over the past 60+ years has been a good tracker of the general market. If the company added does well great for them and me. If the company added does poorly it is at risk for delisting. The company that is removed if it turns it around is eligible to be brought back, but if not then it is what it is.

Sure i may be buying Tesla at a premium i am Also dumping a company that is projected to be declining and once off the S&P at risk for further decline.
S&P is not projecting anything. They are dumping a company whose capitalization fits their membership criterion less than some company not in the index.
Risk is not a guarantor of return.
000
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by 000 »

Northern Flicker wrote: Sat Nov 21, 2020 1:13 am Every stock in the S&P 500 today, except those in the index when it was launched in its present form in 1957, were added at some point. It is just a normal part of index maintenance and governance.
I don't think a stock being added this high is a normal occurrence. The only other time I can think of it happening was BRK, which of course has brought the index down since being added.
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JoMoney
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by JoMoney »

000 wrote: Sat Nov 21, 2020 5:28 pm
Northern Flicker wrote: Sat Nov 21, 2020 1:13 am Every stock in the S&P 500 today, except those in the index when it was launched in its present form in 1957, were added at some point. It is just a normal part of index maintenance and governance.
I don't think a stock being added this high is a normal occurrence. The only other time I can think of it happening was BRK, which of course has brought the index down since being added.
It's been in the news that Tesla is "the largest company ever to be added to the S&P, according to analysis from equity research firm Baird"
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willthrill81
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by willthrill81 »

CurlyDave wrote: Sat Nov 21, 2020 2:25 pm
willthrill81 wrote: Sat Nov 21, 2020 11:14 am
CurlyDave wrote: Sat Nov 21, 2020 10:16 am
TravelforFun wrote: Fri Nov 20, 2020 1:01 pm
...This applies especially to the Robinhood crowd.
Criticism of the "Robinhood crowd" is fairly common around here.
That's because it's pretty clear that the overwhelming majority of trading done on that platform is for individual stocks, which BHs rightly eschew. It's one of the most closely held tenets of BH-ism.
I understand that part, but it seems to me that since we can't outlaw that behavior we have to learn to adapt to it. Or maybe not adapt. But evolution tells me that if we don't adapt we will become extinct.
I'm not persuaded that Tesla has a big enough impact on holders of index funds to warrant more than a yawn for reasons that Nisiprius has already pointed out.

BHs aren't critical of Robinhood because they are afraid that it's going to hurt them. They are critical of it because it is very likely to hurt a great many of those use it (i.e. for bad purposes).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
Northern Flicker
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by Northern Flicker »

000 wrote: Sat Nov 21, 2020 5:28 pm
Northern Flicker wrote: Sat Nov 21, 2020 1:13 am Every stock in the S&P 500 today, except those in the index when it was launched in its present form in 1957, were added at some point. It is just a normal part of index maintenance and governance.
I don't think a stock being added this high is a normal occurrence. The only other time I can think of it happening was BRK, which of course has brought the index down since being added.
Not as big as Tesla, but Yahoo in 1999 was around $100B when added, which would be more today with inflation. It promptly crashed 6 months later. I think Facebook was in the general neighborhood of $100B when added in late 2013.
Risk is not a guarantor of return.
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mokaThought
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by mokaThought »

nisiprius wrote: Fri Nov 20, 2020 2:15 pm Owning Total Stock isn't going to protect me or anything, but it is going to free me from anxieties about the addition of Tesla, because I've been owning Tesla since 2010 or so. If Tesla crashes, I lose perhaps 1% or 1.5% of what I have in Total Stock, but it will just be money that I had previously gained from the run-up in Tesla because of having owned it for years.
+1. Not only this, but long-term index investors who periodically rebalance between stocks and bonds have been taking the proceeds of this run-up and filing them away. I've rebalanced several times this year since the low point in March. If Tesla fails, I still profited.
70% stocks — 63% US TSM, 27% FTSE Dev Mkt All Cap ex-US, 10% REIT | 30% bonds — 50% TSP G Fund, 50% TSP F Fund
Angst
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by Angst »

This ↑ +1

As discussed quite a while ago, far up-thread (that other Tesla/S&P 500 thread), the way to try to play the expected addition of Tesla to the S&P 500 would have been to buy the completion index (eg, VXF). But that's pretty much in the rear view mirror now, water under the bridge.

All things equal, I think TSM is simply preferable to S&P 500, but it's hardly a huge deal, especially if you're not bothered by threads like this one. ;)
Last edited by Angst on Sun Nov 22, 2020 8:43 am, edited 1 time in total.
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Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Post by LadyGeek »

I removed an off-topic interchange regarding ageism. As a reminder, see: General Etiquette
At all times we must conduct ourselves in a respectful manner to other posters.
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