[caliwagon]

Yes, there is some hand waving, but it conveys the general idea that current wisdom and circumstances have made investing in large sets of stocks all the time with no regard to the underlying fundamentals does put an upward pressure on prices.

No the s&p 500 is not "everything", it is one, albeit very popular, index. There are many others, but the underlying concepts are the same. Further, the companies are not selected for long term performance. Ignoring some finer details, the s&p 500 is the largest 500 US companies by market cap. Perhaps you are confusing this with the DJIA which is hand selected, though not selected for long term performance by any means; rather, it is selected in a way to represent the economic landscape - how well it achieves this is a matter of debate for sure.