The S&P 500 committee looked at SpaceX and said no thanks. Not we'll think about it. Not maybe later. Just no.
This matters because index funds tracking the S&P 500 hold about $14 trillion in assets. When the committee refuses to add a company, those trillions stay parked elsewhere. Your 401(k) won't own SpaceX through your Vanguard fund. Neither will your IRA. The biggest IPO in history gets launched into space without the passive investing crowd strapped in for the ride.
Index fund investors are now discovering they don't actually own what they thought they owned. They own what a committee in New York decides they own. The committee meets in secret. Reviews companies in private. Applies criteria nobody fully understands. Then announces additions and deletions like a nightclub bouncer with a clipboard.
SpaceX didn't meet the requirements. Maybe the profitability metrics were off. Maybe the free float was wrong. Maybe Elon Musk tweeted something that day. The committee doesn't explain itself to you.
Retail traders are furious. They believed indexing meant owning everything important. Turns out it means owning everything a panel of analysts considers important based on rules written in 1957 and updated whenever someone remembers to update them.
The technical picture is clearer. SpaceX will trade. People will buy it. The stock will go up or down or sideways. None of this will show up on your quarterly statement because you outsourced your investment decisions to a committee that doesn't return your calls.
The S&P 500 made its decision. You get to live with it. Your retirement account sits this one out while actively managed funds and individual stock buyers get first crack at rocket company shares. Passive investing means passive spectating. The indexing revolution promised you'd own the market. Turns out you own whatever f*cking list they hand you.
Photo by Olha Ivanova on Unsplash
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