>1. Growing at a rapid rate over long periods of time is hard, doable and rewarding
and depends on factors outside your control.
This last is a critical caveat, and really the crux of the argument. It's not about cheating, but the limits of predictability in complex dynamic systems.
Exactly. The rewards need to make the toil worth it. Many started social networks and search engines in the late 90s / early 2000s. Many failed. My guess is some are broke.
The plot on page 39 certainly looks like the St Paul market turned somewhere around July of 2020, over a year before the rent control, and the downward trend accelerated over the next couple of years. I'm skeptical of the authors' ability to tease out the contribution of rent control to a process that had already begun well before the alleged causal event.
I lived there at the time. The George Floyd riots were in late May/early June 2020. I went to the protests by the police station in the Powderhorn neighborhood, that's the police station that got burned down. I got the hell out before that, though.
Most of the damage was concentrated in Minneapolis, a little south of the river. But what happens in Minneapolis affects St. Paul, and vice versa. St. Paul wasn't unscathed, either. Property values dipped as a result of the riots, and I'd go find more evidence of that if it wasn't just taken as a fact by the people who live there.
There was also an arson on a construction site in downtown St. Paul later that summer that spooked a lot of folks too.
There's also George Floyd Square, an ad-hoc memorial at the intersection where he was murdered. For reasons beyond me, this was a source of controversy for well over a year, and I know a lot of MN righties who took the city's willingness to leave the memorial there as "capitulating to crime" or something.
In short, don't use Twin Cities property values in the early 2020s to make generalizations about economics or policy. It took years for those scars to heal. Things didn't really go back to normal until 2023 at the absolute earliest, and some things haven't ever gone back to the way they were.
oh so it's okay to just murder a random guy if it turns out the guy once had less than a gram of cocaine in his pocket (but you didn't know that he did)
What is this character assassination nonsense? To give someone the death penalty you have to go through a trial for a specific crime they did. You can't just shoot first and find excuses later.
It's terribly hard to isolate rent because of the supply/demand shock (in geographically dependent directions) that COVID had on the market. It made people move, a lot of people got a lot of free money and were out of work, among many other changes.
Sounds like they're burning through their reserves as well. But since China's economy is more centrally controlled, it's likely they keep bigger reserves.
Once Iran closed the Strait, Trump's surrender became inevitable. The rest has been a combination of him slowly coming to terms with the inevitability of that outcome, and buying time to come up with a way to spin the catastrophe as a success.
The only way to spin it as a success is to decouple the US from international news sources. Otherwise everyone will be aware that Iran is spinning it as an Iranian victory, and enough people will ask "well, who actually won?" and look at the actual results. And in that reckoning, Trump will have lost.
Unless... unless the government of Iran falls during the stalling. If they get no oil revenue... maybe? Could it happen?
>If the conflict ends, or the U.S. stops exporting the oil, the tanks will fill up again...
Not quite. Once the conflict ends, there will a lag of several months before the tanks will start filling up again. So even if it ends tomorrow, we may still have to ban oil exports for some time. I don't think there are any political ramifications for Trump---he has complete control over what used to be the Republican Party, and banning exports would probably actually help him with undecideds. But he will get heat from his sponsors and handlers in the oil industry. Policy-wise, Trump is a blank sheet of paper, continuously filled in by anyone in a position of power who flatters or bribes him. And the oil industry has been a major patron for him.
Yes, if you mean "fill up" as in full it will take a few months. These tanks are massive and there are a lot of them.
But it will only take a few days before the tanks start filling up again. A lot of oil runs through this facility: most of the U.S. production excluding the West Coast. They're only running dry right now because other countries are buying expensive U.S. oil on the spot market because they can't get the (cheaper) Middle East oil they already have long-term contracts for. Once the conflict ends, the only lag time for them to switch away from U.S. oil is the time it takes for the tankers to get to their destinations, which is measured in days and weeks, not months.
>...which is measured in days and weeks, not months.
There are multiple issues that will force a lag of at least a couple of months. First, the issue of the mines that have been reported. Second, the tanker owners will want to be quite sure hostilities aren't going to erupt again. Third, while tankers that are trapped will leave, there will be a major lag while tankers that have been moved to other parts of the world get redirected back to the Strait to fill up. It will indeed be months before there is enough oil flowing to start retaining reserves again. It isn't like the state of shipping was frozen the day the war started and will unfreeze as soon as the ink is dry on the new cease-fire deal.
I haven't seen any articles saying "tomorrow" oil is going to $200/barrel. I have seen lots of articles predicting that once the stocks run out, the price will go to $200/barrel. The articles differ on exactly when that will happen. But seems like it's closer now than it was a month ago. People who are downstream of a stock, and have never experienced that stock running out, will not believe that it can run out until they see it. In the past, someone has always come along and refilled it before it hit zero. Maybe some deus ex machina will arrive to refill it again. Hard to see what that will be this time, though.
I don't think that any study on the benefits of protein intake is meaingful if it does not also take into account exercise. The effect of a protein-only diet on a largely sedentary animal that lives in a small cage is likely to be very different than the effect on a human who exercises regularly.
>All that an inclusion of these new companies would accomplish is a bailout of their stockholders by pension funds and ETFs where millions of regular people shoulder all the downside risk.
Carvana is the poster child for this. It's astonishing that a company with a history of shady practices, and that has yet to offer a convincing explanation for why it is not a scam, is part of the S&P 500.
No offense but your responses sound like AI or engagement farming. I think the "why are these rules good" is self-evident to anyone who read the comment.
HN rewards engagement in the form of upvotes. If you make a post or comment with the intention of getting upvotes, you're engagement farming. I hate to break it to you, but there are many people doing that on this website.
Why do you think all engagement farming would result in downvotes? You think HN posters are so keen at sniffing out bad actors that they would never reward them by accident?
It feels like you're being willfully dense about this. I can see why the other person accused you of being AI.
>It feels like you're being willfully dense about this. I can see why the other person accused you of being AI.
No, you fucking idiot. Not everybody who disagrees with you is AI.
"Engagement farming" is a term of art with a specific meaning, basically just the adult way of saying "ragebait". People engagement farming on IG or TikTok are typically doing so by posting deliberately controversial content designed to troll upset viewers into writing upset comments. It is inherent to the technique that it only works on platforms without downvotes.
You don't see anyone "engagement farming" on Reddit either, it's always specifically "karma farming" because farming karma requires positive engagement. Engagement farmers do not care if the engagement is positive or not, the required approaches are completely different.
You're conflating engagement farming and rage-baiting. Engagement can be both positive and negative. I can't find any online sources that agree with your definition.
Here's one that I think sums it up pretty well:
"Engagement farming refers to a range of deceptive practices on social media designed to artificially inflate engagement metrics such as likes, shares, comments, and followers."
"Engagement farming employs various tactics to exploit social media algorithms, with the intent to appear more popular than actual user interest would warrant. Examples include posting controversial content to provoke emotional responses, repurposing successful posts without originality, and using automated systems for mass liking or following." [1]
If you don't think this is happening on HN (especially to mass downvote posts) you're naive.
Maybe look at how people actually use it? Not sure why the Indian blogspam is worth looking at.
"Engagement" has a specific meaning. It's different from "like farming" or "karma farming". Some platforms specifically reward engagement, making it a reasonable thing to farm on those platforms.
> using automated systems for mass liking or following
Clearly the author was clueless, this has nothing whatsoever to do with engagement farming.
To me it's more about how real the financial strength of the company is versus being propped up on some shady accounting. Not sure if that was the case with Carvana or any of these new IPOs, but personally I have my nest egg in the S&P and don't want sharks abusing the index for their pump and dump exit strategy.
In any case, it's been only in the last years that we have had an explosion of a huge variety of funds with low fees, so some of these product strategies need to be retro fitted for a time they did not exist.
Your question is still not what you're asking. Passive funds do nothing but follow indexes, so what you're really asking is "have value indexes ever beaten the general sp500 index?".
And the answer is yes, e.g. both the S&P 500 Value Index and S&P 500 Pure Value Index have beaten the S&P 500 historically.
Small Cap indexes, have also *significantly* outperformed the S&P 500 from 1927 till today (a compounded 13.1% annual growth).
Value stocks represent companies whose price-to-book is particularly attractive compared to the underlying business, and since investing is tied by the sell/buy ratio, buying at a discount improves it. Needless to say, value stocks require more risk, and risk is directly related to potential growth.
Small caps, are both riskier and have a much larger room to grow, they have significantly outperformed the SP500 since 1927.
Neither value nor small caps have done well, in the last decade, as the financial markets have multiple times provided better returns to a small but heavy portion of the market that was neither risky nor at any point had particularly attractive price-to-book ratios.
No you’re just assuming what I am asking. You have proven my point so thank you. No examples and lots of buts and exceptions. We are probably talking around each other to some degree but that’s ok!
I gave you numbers and names of indexes that have historically beaten the S&P 500 index in the value category.
All of those have one or more ETFs that replicate that index.
There's an extensive amount of scientific literature talking about the outperformance of value and small caps to the broader market, starting from Nobel price winning Eugene Fama.
And the relative values of those stocks will shift requiring rebalancing. You might be able to do that with new dollars for a while but hopefully, eventually, the swings are much more than new dollars and then what? Pay capital gains tax on sales to rebalance? Convince yourself the new random allocation is fine?
I thought the point of index funds weighting by market cap is that they don't require rebalancing, because the weight of stocks in the index exactly tracks price movements. You just keep holding the exact same number of shares, and more valuable stocks automatically take up more of your portfolio.
If you pick stocks with the correct weight to track the index, you're effectively running an index fund. And so you don't have to rebalance to keep tracking the index.
You can add stocks whenever you put money in. Whether that's because you got your paycheck or a dividend or some other income is kind of irrelevant. And you can remove stocks when you take money out. But you probably shouldn't start selling one stock to buy another just because their prices moved, unless you have information that lets you time the market.
But then you wind up with a portfolio that isn't balanced and isn't tracking like an index fund. An index fund doesn't simply buy a flat amount of stock and hold it, they buy stock in proportion to the relative weight of the exchange. Which is always moving
Market cap weighting is special. If company A has 500 shares, company B 500 also, than a fund that has 5 shares of A and 5 of B is market cap weighted.
And what happens if company A issues more stock? Company B is delisted? Company C is now listed? Company A and C merge? Company A spins off it's most valuable side business into it's own independent listing company?
500 shares of company A is worth 100% of the market cap of company A.
500 shares of company B is also worth 100% of the market cap of company B.
So if you have 5 shares of each, you'll have 1% of the market cap of each, even if one of those companies finds the cure for cancer or turns out to be a money furnace.
What are you talking about? Those index fund are constantly rebalancing. This is why you buy an index fund, so you don’t have to constantly rebalance your portfolio.
I don’t think this is correct. Gains historically accrue to a small number of companies in a given time window. If you buy all the grocery stores, you’re exposed only to sector risk, if you pick one or two, you’re also exposed to the risk those companies don’t contain the “winners”.
I suspect the number of picks you would need is surprisingly small to reach high parity with the S&P.
If you don’t pick the right grocery company, you have a shot at picking the right telecommunications company. You pick fewer winners, but you’re also picking fewer losers.
The real reason to do this is because you want to avoid specific companies that are inside the index. You would only do this if you felt confident in your ability to avoid investing a lot of capital in losers. Even if you’re great at avoiding the telecommunications loser, you might be worse than average at avoiding the loser in other sectors.
I don't know about the typical HN contributor but I personally lack the cash to but all the stocks in the S&P. There are 503 stocks tracked in the S&P 500 index. It would cost about 2.8 million USD to buy 100 shares (one board lot) of each if you were naive enough to weight your purchases that way. If you were to weight the stocks differently (eg. total market capitalization of each company) the amount would be higher.
Or, I can pick up 100 shares of an index ETF for a few thousand and have someone else do all the work for me including rebalancing and doing all the other required calculations (lot tracking and cost basis calculations etc.).
Trading in lots of 100 hasn't been required since I dunno, the 90s?
Assuming you're in the US there are several competent brokers that sell fractional shares. Any broker will do lot tracking and cost basis calculatioms for you, they're required to.
Rebalancing might be a pain, yes. I'd bet the drift isn't too bad most of the time, but it's probably effort every time you add or remove money. You'd want to build a tool to tell you how to add and remove to get closer to the index. If you can get the index weights and your holdings in a machine readable format, it would seem pretty tractable, but it would take time to setup; there's a reason funds have expenses, but index fund expenses are small.
I'm 100% invested in funds because it's a lot less work, but if you felt strongly about excluding certain stocks, I think it's pretty doable for say S&P 500. Tracking a total market index, or an international index would be more challenging. Bond indexes are also challenging to track, even for bond funds.
Im pretty sure Enron was in there in the past as well - 7th largest by revenue... that would make Carvana seem like nothing.
To answer your question honestly though -- the inclusion is mechanical based on criteria not policing based on opinion. Carvana being a history of shady practices is your opinion... (I would agree with you)
My opinion, yes. But if someone said they had invented anit-gravity, then showed you a bowling ball "floating" but with a sheet covering any potential support, you'd be pretty suspicious. And if they refused to remove the sheet, and had previously been convicted of fraud, you'd probably be extremely suspicious. But it would still only be your opinion until the sheet was removed.
But what if your dad had a closely-related sheet company that you regularly transacted with but isn’t public because he was barred for life from giving public demonstrations but owned tons of shares in your demonstration and sold millions of dollars worth on a daily basis?
Herbalife has decades of profits from selling wannabe Herbalife distributors a dream of financial independence they'll never achieve though, which might be unethical but is a bit less likely to lose your pension fund money than a company accused of getting 73% of its earnings from a deal with a convicted fraudster...
Whenever someone says nowadays, they're highlighting recency bias. The goals of holding a broad market ETF are diversification leading to sleeping well over the long term (at least to me).
See my reply to @rtpg. The short answer is that it is believed they are selling high-risk loans to a company they control, making it look like the publicly traded Carvana is some kind of miracle in the car industry while offloading the risk to anonymous shell companies.
Time will tell if it’s a ponzi or not. I am not fully convinced but it will be interesting to see, the family dynamic is always a bit suspicious and especially how they were at the end of a rope post Covid.
"In January 2025, short-selling investment firm Hindenburg Research published a report titled "Carvana: A Father-Son Accounting Grift For The Ages," in which it disclosed a short position against the company. The report alleged that Carvana's financial turnaround was a "mirage" propped up by accounting manipulation and lax loan underwriting."
"A class-action securities fraud lawsuit is proceeding against Carvana, its founders, executives, and underwriters in the United States District Court for the District of Arizona."
(i have no opinion on the matter, just functioning as your google)
>...if they indeed are running a ponzi it would be surprising it could last so long.
There's a practice in the loan industry called "pretend and extend," which basically means endlessly extending credit to lendees who are behind to avoid acknowledging the loss. Remember, in Carvana's case the loan buyer only exists to take on debt, not be a going concern. I think much of the market actually realizes Carvana is a scam, they just see that it is a relatively sustainable one as long as the government doesn't step in. And they don't see that happening, particularly with the current administration.
They're an outlier in the industry in terms of profit per car. But they don't actually get revenue from selling cars, their revenue comes from selling car loans. So they're making the additional margin on the financing. They are also famous for not turning down loan applications. So putting the pieces together, it seems like they are selling high risk loans at a healthy profit. Which brings up the question of who is buying those loans. They don't disclose the buyers, but claim that those buyers are not controlled by Carvana or its parent. Given the history of fraud, it's hard to take those claims at face value. The suspicion is that they are selling the loans to family-controlled shell companies and leveraging the stock to finance the scheme.
If "many businesses" operate this way, then "many businesses" are committing fraud. You can't publicly claim to be selling loans to an unrelated company when in fact you control that company.
>Can you explain what is wrong with people having different levels of wealth?
There's nothing wrong with it, in moderation. Where it becomes a problem is when the distribution of wealth starts diverging widely from people's expectation of what a fair distribution would be, accounting for different levels of ability and luck. Aside from this cognitive dissonance, there are also pragmatic limits on how big a disparity can be while still having a functional democracy. It's clear that truly enormous disparities in wealth, made even worse by a lack of regulation in political donation, lead to major distortions in the principle of "one person, one vote" which is a cornerstone of democracy.
>Or asked differently, if it is bad, should every individual have the exact same wealth?
No, because people have different levels of ability and experience different amounts of luck. Inequality is inevitable, and the vast majority of people understand and accept that. But they also expect that the system should at least roughly resemble a meritocracy, and that is impossible to maintain in an unregulated capital system because of the feedback loop between capital and income. Most professional sports leagues recognize this problem: once a franchise starts winning, they make more money, which allows them to buy better players, which leads to more wins, etc, until you have a league where a handful of teams can win the championship and the others are perennial also-rans. So they cap the amount of money that can be used for salaries. They are free, of course, to make as much money as they can, they just can't plow it all back into player salaries. Capital is regulated to preserve the fairness of the system. That doesn't mean the teams are all equal, there are still franchises that perform better over time than others. But it's more clearly tied to intrinsic merit like coaching systems and player development, not just going out and buying proven superstars.
Similarly, a person of average skill can get lucky and make a large amount of money. Having that capital in turn makes it easier to make more money. Over time, and across many such situations, capital starts outrunning merit as a predictor of someone's future income, which is socially demoralizing. That's where the US is today: a pervasive feeling that the system is rigged. To a great extent, this widespread perception contributes to the current political climate in the US.
There is another possibility: "they" are interested parties working to keep futures down as long as possible. When the space shuttle Columbia re-entered with a massive hole in its wing, the control systems kept it stable for quite awhile, until finally the vehicle went so far out of the control band that it could no longer compensate and it disintegrated. We may be seeing the same thing happen on a much larger system that is experiencing conditions outside of its operating history.
and depends on factors outside your control.
This last is a critical caveat, and really the crux of the argument. It's not about cheating, but the limits of predictability in complex dynamic systems.
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