Chamath Palihapitiya On Nasdaq 100 Rebalance: 'Will Be A B***h'

On Tuesday, billionaire investor and Social Capital CEO Chamath Palihapitiya shared his insights on the upcoming index rebalancing of the Nasdaq 100, highlighting the potential implications for the market.

What Happened: In his tweet, Palihapitiya pointed out that since January, a select group of stocks have been the primary drivers of the stock market.

These seven companies, which he did not name, represent the largest market cap companies of the Nasdaq 100 and S&P 500.

“Index rebalancing will be a [b***h]…The result is a unique phenomenon that has implications for the next move upwards (or downwards),” he tweeted. He further added that the spread between the weighted and unweighted index will close as a result of the rebalancing.

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Why It Matters: The upcoming special rebalance of the Nasdaq 100 index is expected to reduce the influence of the top seven companies from 55.1% to 43.7%. This shift will likely prompt many funds to sell these companies’ stocks in order to rebalance their portfolios.

Palihapitiya suggests that this could lead to a closing of the “spread” between the weighted and unweighted index, potentially benefiting other companies in the index.

Palihapitiya’s comments provide a unique perspective on the market dynamics and the potential impact of the rebalancing.

As previously reported, the rebalance is a response to the increasing influence of tech giants in the index and aims to ensure a more balanced and diversified index.

The “Magnificent Seven,” as they are often referred to, currently represent over half of the Invesco QQQ ETF, and their reduced influence could lead to significant price shifts in the tech-heavy index.

The Magnificent Seven comprise of Apple, Google parent Alphabet, NVIDIA, Amazon.com, Tesla and social media giant Meta Platforms.

Photo Courtesy: Shutterstock.com

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