If you just buy good solid companies that pay dividends, you do ok.
What are the good, solid companies 10 years from now? 20 years? When should I dump my current good, solid companies?
True, but if I replaced S&P500 with VTSMX (a Vanguard index fund, which got marginally higher than 50% returns over the same time period) would not.
> 2. The S&P 500 as presently constituted omits all the companies that were excluded during that time period (eg., went broke).
The current S&P 500 does, but watching the S&P500 index over time does not. And index funds generally rebalance to take these things into account.
As another user mentioned: knowing which companies are "good solid companies" is a trillion dollar industry. No simple strategy beats the market over the long term, other wise passive investors would all do it, and start beating the market.
So if you invested 100 in an index fund, you'd have 150, if you invested 100 split evenly in those 4 stocks, you'd have 165. Of course, if you invested in GE, you'd have lost money. And if you invested in Amazon alone, you'd have $500.