[Week 37 of 2025] From Robinhood to Charizard

Welcome back to Price and Prejudice with a few musings from Week 37 of 2025.

Robinhood Joins the Club

Robinhood is now headed into the S&P 500 as of September 22. The decision comes from a committee at S&P Dow Jones Indices, which meets regularly to decide who’s in and who’s out based on a criteria involving size and liquidity. It's also a milestone for the company which started as the scrappy app for commission-free trading and now sits alongside Schwab, Morgan Stanley, and Goldman.

In general, stocks that get added to the index enjoy a nice price bump, although some argue that this is disappearing. One reason is that markets have gotten better at anticipating inclusions, arbitraging away the anomaly, and supplying liquidity. There’s also a timing nuance: historically, you saw two effects—an immediate jump on the announcement day (traders pricing in the forced demand) and another move on the effective trading day when index funds actually buy. The first tells you about expectations (of future flows), the second about mechanical flows.

This is also one of those occasions where a seemingly arbitrary decision by a committee moves billions of dollars. The S&P 500 isn’t the “500 best companies,” it’s whatever a handful of people decide is representative of the U.S. economy. It’s also not unlike when the U.S. president makes an offhand remark, or when Jay Powell clears his throat at a press conference: the decision itself is less important than the sheer volume of money wired to react.

A World Without Earnings Season

This WSJ article talks about the Long-Term Stock Exchange, which wants the SEC to scrap the rule requiring public companies to file results every three months. Instead, they’d have the option of reporting twice a year. The pitch is that CEOs would spend less time obsessing over “the quarter” and more time pursuing long-term strategy. In theory, that means fewer bean-counting distractions and more visionary thinking. (In practice, it might just mean cramming for two really big exams instead of four smaller ones.)

Whether this plan actually improves the information environment depends on the penalty for silence. If investors punish firms that go quiet, companies will find ways to keep feeding updates—through press releases, investor days, or guidance dripped out to analysts. In other words, we might end up with quarterly disclosure anyway, just in less standardized, more ad hoc forms. That could make it harder, not easier, for outsiders to compare firms. The LTSE frames this as cutting paperwork, but it might just shift the paperwork into PowerPoint decks and carefully worded “business updates.”

The more interesting angle is how this changes the ecosystem built around quarterly earnings. Analysts, traders, and hedge funds spend much of their lives prepping for and reacting to earnings calls; their whole business model is parsing management tone or trading a one-cent beat. If those opportunities shrink to twice a year, the ecosystem will evolve. You could see more reliance on alternative data, or bigger speculative frenzies around the semiannual “earnings super-bowls.” The quarterly ritual may be flawed, but it also anchors a vast network of activity.

Alternative Alternative Investments

WSJ reports that Pokémon cards have returned nearly 3,800% since 2004, trouncing the S&P 500 and even Meta. The line on the chart is almost comic—it’s flat for a decade, then shoots straight up around 2020, like someone suddenly remembered their binder in the attic and had a stimulus check handy. Since then it’s been choppy but persistently high, suggesting that nostalgia has more staying power than people thought.

The source of demand is partly generational: millennials and Gen Z with disposable income are now circling back to the franchise they grew up with (myself included), sometimes even passing it to their kids. That’s powerful, but it also makes this more of a cultural wave than a financial product. Hedge funds want scalable, repeatable strategies. The Pokémon card market isn’t big enough to absorb institutional flows—you can’t responsibly put billions to work here without owning the whole thing, or at least accidentally cornering the market in holographic Charizards. That makes it less of an “asset class” and more of a collector’s niche, however impressive the index looks.

Podcasts

• This Jamie Dimon interview is a nice reminder that life is some mix of luck and effort, with effort mostly serving to magnify the effects of luck.
• This Rational Reminders episode with Martijn Cremers is a nice reminder that conventional wisdom deserves a second look—in his case the notion that passive investing is superior over active investing.