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markisus | on: Nasdaq's Shame
QQQ is problematic because it’s influenced by strange back room dealings with Space X, if the article is to be believed.

VTI is different. It literally tracks all public stocks, weighted by market cap so no such manipulation is possible.

If a bunch of people will be forced to buy Space X (QQQ holders), active investors will short the stock in anticipation of market correction and money will flow from those who were forced to buy. I’m sure there are other ways to take advantage of a forced buyer situation.

Total market will be unaffected, assuming efficient market hypothesis / no arbitrage.

nighthawk454 | parent
QQQ is not in isolation. It’s just a bundle of stocks. Rebalancing that will affect the prices of its constituent stocks, which include some of the highest market cap stocks. Those same stocks are also in many of those other popular market-cap weighted indexes (VTI, VOO, SPY, etc). Price action originating from Nasdaq 100 rebalancing would affect everywhere else those stocks are held. Which is a lot of places.

Except those other indexes won’t have SpaceX. Suggesting any index price moves would be … asymmetric at best.

Now it’s being reported that they’re angling to get SpaceX in the S&P 500 index as well [1]. Maybe if all the indexes get it then it balances out everywhere, who knows. This whole event would be in beyond unprecedented territory.

[1] https://finance.yahoo.com/news/p-weighs-rule-changes-speed-1...