This post is quite interesting, and I will have to re-read and ponder it some more, but there is one obvious flaw in the analysis.  By analyzing the past returns of current S&amp;P500 companies, the author is allowing for survivorship bias; companies which have done consistently well (in terms of market capitalization) over the analysis period are likely to be over-represented in current indices.  To correct for this, the author should re-run the analysis using the S&amp;P500 companies from the beginning of the period instead of the end.<p>This is the same problem that a study ran into some time ago when it demonstrated that the portfolio managers with the worst returns were the best investments; it analysed the returns of a number of managers over a period and found that the ones with the worst returns at the beginning had the best returns at the end.  The problem is that all the consistently mediocre or bad managers were discarded, as they did not survive until the end of the period.