An Interesting Point On Survivorship Bias

Thought this was particularly interesting. From David Rosenberg:

"Everyone complains about government manipulation of the data -- how "hedonics" skew the numbers (like GDP and CPI). But what about the stock market? I'm not saying it's "manipulated" but it does have substantial "survivorship bias" -- especially after a gut wrenching recession. Just cleaning the failures out of the system and erasing them from the S&P 500, from WaMu, to Wachovia, to Bear Stearns, to Lehman, to Fannie and Freddie, and replacing them with companies that survived, was responsible for nearly 40% of the rally in the market off the 2009 lows. Think about that, if those firms who went under were still in the index, according to some help from a strategy friend at an aforementioned bank, the S&P 500 would be trading closer to 900 today than 1,100."