What they mean is that when a company becomes part of an index, like the S&P500, historically, they come in somewhere around approximately rank 500. The S&P naturally results in more buying of winners and more selling of losers, so anyone who owns an S&P ETF will own that stock when its approximately rank 500, and will own more and more of it as it grows to be a bigger part of the index (higher rank).
Now, however, these IPOs are so big that straight away they're at like rank 10, or 15 or whatever. The investors who own the S&P don't experience any of the upside when they grow from rank 500 to 10. They are only exposed to the downside (if they lose value/rank/fall out of the index) or the marginal upside if they continue performing and generating returns.
The point is that given the size of the IPOs relative to other companies, their addition to the index has a much more downside exposure than reasonable upside exposure.
I'm probably butchering my explanation here, so apologies if it sounds odd.
That makes no sense still. It seems like folks are conflating their feelings towards SpaceX or AI with reality.
Sure Nasdaq100 is going to have companies like SpaceX, that is the whole point of that index. Sp500 there is no chance under current ad historical rules.
If you look at an index like the sp500 they have maybe ~18 companies join the index annually. If you look. Back over the last 4-5 years maybe 3-4 of those in totality (so out of 72 companies) had an ipo within the prior 3 years. Some of those 3 like a Kenvue were a spinoff.
You are also assuming because a company is ranked 10 in the sp500 that there is no upside. I am sure there is some interesting data around this, I know I have seen some looks for example if you invested all in on the #1 company and rebalanced as that rank changed that you would beat the sp500. I am sure there is some data that shows a combination inversely. I think it’s the wrong thesis though.
If people are getting 'fleeced' in the corporate bond market, they deserve it because they should know better. Corporate bonds are traded mainly by institutional investors and professionals, not retail like shares are.
This is the kind of wisdom that caused the great financial crisis. Funds are limited in what they can invest in. Institutional investors don’t see high returns. They’re under a lot of pressure to maximize returns within the bounds of what they’re allowed to invest in. There’s a reason they’re risk restricted: they are responsible for a lot of money and society puts a lot of trust into them to not piss away their pension funds.
We learned this lesson the hard way twenty years ago. If we let them invest in dogshit, and the credit rating agencies allow them to, they will.
When institutional investors lose, they’re not really risking their own money. They’re risking yours, or at least your cousins or your neighbors.
What do people mean today? I've always been under the impression that a democratic country follows the majority rule to the greatest extent that's reasonably possible.
This argument never really holds water with me, why stop at card costs? Why not add on an additional fee for every other thing like, fuel surcharge on delivery costs, employee surcharges (I don't live in a place where tipping is expected), or even energy surcharges?
The cost of the product should be what's on the label. If that's not enough, raise the price.
Others have already mentioned that the credit card surcharge is something that the customer has control over. But in regards to the other fees:
> Why not add on an additional fee for every other thing like, fuel surcharge on delivery costs, employee surcharges (I don't live in a place where tipping is expected), or even energy surcharges?
A lot of companies already do this. As long as those fees are mentioned somewhere before purchasing, it's legal here:
It’s worth noting that EU puts clear limits on the size of credit/debit card fees. You can’t add card fees on top of the price either, with some small exceptions.
> Traders in the EU are not allowed to charge you extra for using your credit or debit card. The only exceptions to this rule are American Express/Diners Club cards and business or corporate credit cards, where your employer is billed instead of you. If you use these cards, you may still be charged a fee but the fee can't be more than what it actually costs the trader to process your payment.
The credit card fee is the only thing that changes based on the payment method. The fuel cost, employee cost, etc. is the same for the same product, but if you pay with a credit card, it costs the seller more money.
It's common for the price you pay to change when the method of purchase changes. For example, having a product delivered costs the seller more than if you picked it up from the store, so you have to pay a delivery fee.
Because, between all of these expenses, it is the one the customer controls. The customer chooses what card to use, but the merchant pays the associated cost.
Then what about a toilet cleaning fee? If you as a customer used the toilet during your shop visit, then you get charged a toilet cleaning fee on top of your transaction.
To me, surcharges should not be allowed. The sticker price the customer sees when they decide to buy ought to be the price. This makes comparisons much easier, and enables more competitive pricing.
So you want everything to be labeled with a cash price and a visa price and Mastercard price and discover price and Amex price? Labeling it with just the cash price seems fine, you can go to an atm and get cash if you don’t like the surcharge.
> labeled with a cash price and a visa price and Mastercard price and discover price and Amex price?
of course not. That's absurd.
I want a single price, regardless of my choice of method of payment. The cost should be built-in to the price. If the cost of providing one type of payment method is too high, i want the business to take out out to make their price more competitive (balanced with the amount of people unwilling to shop there without said payment method).
Merchants and payment providers compete to provide payment methods at as competitive rates as possible, because they needs to compete with cash handling (which isn't hard at all), and the consumer doesn't think about "cost of payment method" - they merely need to think about the cost of the item displayed.
This doesn’t make any sense. So the price should include potential transaction fees for the most expensive method of payment? Or you want the cheap payment method to overpay and subsidize the expensive payment method?
There’s also usually a flat fee plus a percentage, how do you bake that into the advertised price when the flat fee may be spread across multiple items? Should every item increase in cost by $0.30 or whatever?
This is just stupid. Advertise the cash price. You can go to an atm if you don’t want pay the fees associated with your preferred payment method.
Now, however, these IPOs are so big that straight away they're at like rank 10, or 15 or whatever. The investors who own the S&P don't experience any of the upside when they grow from rank 500 to 10. They are only exposed to the downside (if they lose value/rank/fall out of the index) or the marginal upside if they continue performing and generating returns.
The point is that given the size of the IPOs relative to other companies, their addition to the index has a much more downside exposure than reasonable upside exposure.
I'm probably butchering my explanation here, so apologies if it sounds odd.
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