[bunderbunder]

People like Warren Buffett and Jim Rogers would end up being the enforcement mechanism behind what's being proposed. Value guys are all about taking advantage of undervalued stocks, and companies that just barely miss being in the S&P 500 are still big enough to have a lot of eyes looking at them investigating whether or not that might be the case.

In light of that, I find it very hard to believe that a huge valuation discontinuity right between company # 500 and company # 501 is likely to stand for long.

Which isn't to say that I necessarily think the EMH is correct, but I do think even if EMH is incorrect there's still plenty of reason to believe that any major market distortion created by something as obvious as the popularity of index funds is unlikely to stand for long.