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Comment by lotsofpulp | Hacker News Reader

The "public" is completely unharmed as long as they stick to broad market index funds. Only the gamblers are harmed.

Assuming the NASDAQ / S&P aren't gamed into listing these at offering price to game the system into putting ~10% of people's retirement into a junk stock on day 1.

"Buy the index" isn't a solution for human influence and corruption, there are people in control of what goes into the index too.

When a stock hits the public market, it gets incorporated into broad market index funds (subject to the rules of those funds). If an overvalues stock gets dumped onto the public market, then crashes after being bought by index funds, then holders of those index funds are harmed.

Are there examples of this and quantified losses? The only one I can think of is Nasdaq and SpaceX, but Nasdaq isn’t exactly an index lay people should be investing in, and it isn’t commonly owned anyway (maybe less than 1% own it). And I don’t think SpaceX has lost any Nasdaq 100 investors money yet.

Obviously diluted though by the 499 other stocks in the portfolio (using VFIAX/VOO as an example).

You can get rich by stealing pennies, if you steal them from enough people. It is still wrong, even if no individual lost enough to care about going after you.

If enough people try profiting by stealling pennies, the cumulative losses are significant; and can threaten confidence in and the strenght of the market.

I mean that used to be true until companies began strong-arming the indexes to include them on day 1 instead of having a mandatory 1-year waiting period. Now you're taking the bag whether you like it or not.

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