Getting removed from a big index is usually the final insult. The stock has fallen, the story has soured, and the index committee formally shows you the door. Forbes's Jim Osman notes this week that Nike, down 78 percent, is exiting the S&P 100, and he raises a fair question: does an exit like this sometimes mark capitulation, the point where there's nobody left to sell?

Let me say first that I remember when Nike was a fixture of every "buy quality and hold forever" conversation. The swoosh, the pricing power, the endless athleisure boom. Companies like that are supposed to be boring in the good way. A 78 percent drawdown in a brand of that stature is not a bad quarter or two. It is a full repricing of what the business is worth, and it usually takes years of disappointed expectations to get there.

Now, the capitulation argument. The logic goes like this: index removal forces selling from funds that track the index, and that selling has nothing to do with what the business is worth. Forced sellers make bad prices. Once they're done, the marginal seller disappears, and the stock can start trading on fundamentals again. There is real history behind this. Index deletion effects have been studied for decades, and the forced-selling pressure is genuine, if usually briefer than people expect.

But notice what the capitulation thesis quietly assumes: that the business underneath has stopped deteriorating. That's the part I can't verify from here, and neither can anyone writing columns. A cheap stock getting cheaper for years is the market telling you its earnings power is shrinking. My general rule stands, the same one I applied when people insisted Lucid below $5 was a gift: falling 78 percent doesn't make a stock cheap, it makes it a stock that fell 78 percent. The valuation question is separate from the price question.

And for every index-removal bottom, there's a stock that left a prestigious index and kept sliding for another five years. You don't get to hear much about those, because nobody writes anniversary pieces about them.

So what's the sensible read? If you owned Nike all the way down, this is a moment to ask the hard question: do you believe the earnings recover, or are you just tired of taking the loss? Those are different reasons to hold. If you're thinking of buying the dip, size it like a recovery bet, because that's what it is. It's not an index fund and it isn't a bond.

The exit from the S&P 100 may well turn out to be the emotional low. It may also turn out to be mile marker 12 on a 20-mile slide. The honest answer is nobody knows, including the people confidently writing either version.

I'll be watching the next few earnings reports for one thing: is the operating business stabilizing? Capitulation in the stock price only matters if the company underneath stops capitulating too.

As always, this is my perspective, not professional financial advice.