Benjamin Felix

Right.

We'll take your low float securities, but we're going to weight them more conservatively than we would weight a typical security.

But they did change the rules and they did change them in a way that would allow companies like SpaceX to be included in the index, which would not have previously been possible.

They also sped up the inclusion.

They shortened the timeline for how quickly a company, an eligible company can be included in the index.

I mentioned earlier that the sort of cynical view here is that NASDAQ is changing the NASDAQ 100 index rules to win SpaceX over in an effort to get their listing.

There was a bunch of articles on that speculating this, and it's plausible, fine.

That's because including a stock like SpaceX in the index would force significant index fund buying, which likely ends up being good for SpaceX, good for SpaceX's early investors, good for NASDAQ if they get the listing.

but potentially comes at the expense of NASDAQ 100 index fund investors if they end up buying a high priced stock that ends up having poor returns afterwards.

It's a conflict of interest that probably should be considered.

I agree.

It's a conflict, yeah.

Now, we've already talked about this at some length, but the crisp US total market index, for example, tracked by VTI does, as of now, continue to have a low float cutoff of 10% for fast track entry.

If you're invested in VTI, this is a non-issue at the current moment in time.

So between inclusion criteria and index weighting methodologies, there's quite a bit of uncertainty about how these mega IPOs will initially show up in indices.

Over time, what tends to happen is the free flow tends to increase and whatever, whatever.

And the seasoning happens.

So in three years, all of these companies probably are included in the index.

But the big concern about buying high-priced IPOs in the secondary market and then having them tank, it's not clear how problematic that's going to be for a lot of index funds.

over a longer period of time, as I just mentioned, these listings will change the public market.