Index survivorship

Index survivorship — the self-cleaning property of a broad, rules-based index: losing companies shrink and drift out; winners grow and get admitted, automatically, with no forecast required. It’s why the index never had to predict GM’s decline or Apple’s rise. Distinct from survivorship bias (1.5’s reporting distortion): this is survivorship as a design feature. The counter-exhibit is any narrow single-country index — the PSEi’s flat decade shows what happens when the pool being cleaned is too small.

First used in: 5.3 · The S&P leverage point and the barbell