If they can actually deliver 10x more work: well, that's how economic progress looks like.

They cannot...

And economic progress for the companies. What these engineers who stay get is just a burnout and a pat on the back. I've seen it, and felt it, many times way before all this slop-coding started

I played a lot of Stunts in the 1990s. I only learned in the 2010s that you could actually edit the terrain, too.

If you have enough swap on disk available, it should be fine.

Details depends on jurisdiction, of course.

In the US, you would likely also have to pay capital gains taxes for such a trade. (I think.)

In Singapore, in contrast, swapping between funds like this would not have any tax implications.

> Index funds already seek to own the entire market, [...]

No, it depends on the index in question.

Yes, most index funds don't literally intend to own the entire market for any sufficiently broad interpretation of the word "entire."

But the point is that we have notable index funds which are marketed to customers as having the intention to own segments of the market according to certain rules, and they are changing those rules with relatively short notice and for reasons that seem suspicious to many customers.

> Yes, most index funds don't literally intend to own the entire market for any sufficiently broad interpretation of the word "entire."

I mean that your index doesn't even have to own a segment of the market. Just look at eg how the Dow Jones Industrial Average is constructed. When a company has a stock split, it changes its weight in that index. That has nothing to do with 'the market'. (Stock splits have approximately no influence on your weight in the S&P500.)

Or you could have an index that captures all the stocks whose ticker starts with X minus those that start with Y plus the current temperature in Frankfort, Kentucky, in Rankine degrees.

I broadly agree. Though I'm less pessimistic: lots of people will pay lots of attention to SpaceX and friends, and with short selling in public markets being possible, an accurate price will be established very quickly.

Remember also: index funds are some of the participants most keen to lend out their shares to short sellers. It's one of the rare ways they can boost returns above the raw index they follow.

> and with short selling in public markets being possible, an accurate price will be established very quickly.

I know very little about markets, but: aren't the short-sellers just going to provide liquidity for the big index funds? Like, if the funds HAVE to buy SpaceX, and the funds are enormous, wont every single stock sold short be immediately gobbled up, as well as pretty much anyone else wanting to sell? Even if everyone else is selling like mad, it wont affect price much at all?

Maybe this is naive, but if these enormous funds are more or less forced to buy SpaceX, it seems impossible that "actual price discovery" is going to happen in any reasonable amount of time, and the short-sellers will be screwed.

Most index funds, and essentially all that matter economically, hold stock in proportion to the free float, and not the total market capitalisation. See https://en.wikipedia.org/wiki/Public_float

So if SpaceX only sells 1% of shares in the IPO, and the rest are locked up, then these index funds will only try to buy some fraction of this 1%.

For simplicity, let's assume about 25% of stocks by value are held by index funds. In our case, that would mean that index funds would buy 25% of 1% of SpaceX, or about 0.25% of SpaceX's market capitalisation. For simplicity, assume a SpaceX market capitalisation of 2 trillion USD, so that would be 5 billion USD. A big sum for you and me, but not all that much too worry about for the index fund industry and the stock market.

Later on, the lock ups will be lifted. That will increase SpaceX's weight in the relevant indices, but will also make sure that more stock is available to buy for them.

About the impact of short sellers: let me construct an exaggerated cartoon example. Suppose our index fund already has a 100 shares of SpaceX and wants to hold 300 more, but no else who holds SpaceX is currently allowed to sell for another three months.

Well, index funds are really, really keen on lending out shares to get a bit of extra revenue. So the index funds lends out 100 shares. They go to a short seller, who immediately sells them back on the exchange, where the index fund buys them. Now the index fund has exposure to 200 shares. 100 'real' shares it just bought, and 100 shares that the short sellers owes them. Well, the index fund can lend out the 100 real shares again, and repeat the cycle 2 more times, so that at the end they have 300 lend out shares and 100 real shares on their books.

In three months the lockups expire, and the short seller closes out their short position.

The above is an exaggerated stylised cartoon description, but it's not too far off what can happen in principle.

Well, the index fund would lend out the 100 'real' shares they have at the end, too, just to collect a bit of extra borrow fee on another 100 shares. So the index fund has an economic claim to 400 lend out shares, and doesn't currently hold any physical shares.

Other market participants can trade these 100 physical shares back and forth amongst each other (or loan them to each other, too) to help with price discovery.

There's also stock futures, where you trade the right/obligation to transact some shares at specific prices in the future. Economically, entering into a contract today to be obliged to sell shares in the future is equivalent to becoming a short-seller, but for regulatory reason you don't need to borrow the shares when selling futures.

So stock futures are another way to help with price discovery, even when there's scarcely any underlying shares available right now.

That’s a really great explanation, I think I more or less followed all of it. Thanks for taking the time to write it out!

> with short selling in public markets being possible, an accurate price will be established very quickly

It'll be virtually impossible to short sell the stock within the first month due to lockups, and it'll take 180 days for all the pools to be available: then, we'll have a more-or-less "accurate" price, as you put it.

Whatever float is available on the market can be made available for short sellers to borrow. That can even happen multiple times: ie short interest can exceed 100% of the float. Or even 100% of the market capitalisation.

With stock futures, you don't even need to borrow the stock to (effectively) short it: anyone with enough collateral can write stock futures, whether they own the underlying stock or not.

If you are subject to capital gains taxes, this would likely be a bad idea? (Though I have no clue how American 401k work in this regard.)

401ks are tax exempt so there would be no tax for switching investments.

You know that short selling is possible? And index funds are traditionally some of the keenest participants to lend their shares out to short sellers in return for a bit of extra return (over the raw index).

Can you short a company that quickly after it's IPO? I thought there was a period when that was impossible.

Short the index to short the IPO by proxy is what eru is saying.

Sorry, that's not what I was saying.

As far as I can tell, there's no minimum period you have to wait after an IPO to be able to short shares. Legally, you can do it from day one.

And instead of a classic short where you have to borrow the stock, you can also write single stock futures. Futures don't require you to borrow the underlying. You just need enough collateral, but that can be anything, like T-bills or whatever.

Or you can write call options, or buy put options, to bet on a falling stock price.

There's lots of different indices with different rules, and lots of different funds to implement these. Pick one that works with your preferences.

I did.

Then the rules were changed.

Yes, that's mostly correct. Many indices are weighted by something like free float.