They're talking about [pdf] how the S&P 500 used to be market cap weighted, but is now float weighted, which means that it will own smaller amounts of the "owner-operator" companies that have historically contributed a significant part of the index return:
"When added to the S&P 500, the share price [of Microsoft] was about $2.41. At January 1999, when the stock was $44.75, insiders still owned 31% of the shares. By September 1999, near the peak of the Great Technology Bubble, when the shares were $47.50 (when Microsoft’s weight in the S&P 500 exceeded 4%), inside ownership had been reduced to 26%, and by early September 2000, the very threshold of the collapse of that bubble, when the stock was $35, inside ownership had dropped to 19%. Today, 15 years later, the shares are only $44.37–a 1.6% annualized return –and were quite a bit lower than $35 only two years ago. Whether by fortune or perception, insiders were dramatically reducing their holdings going into a decade-plus period of decline and stagnation. What did outsiders do? Had the float-adjusted index weighting method been in place at the time, then as insiders sold, such that the float increased, the Index rules would have increased the Microsoft weighting, and mutual funds and other index investors would have been buying more—more of what the insiders were selling."Index investing has all the signs of an investing fad that will be remembered as an embarrassing flop: nearly universal adulation, unthinking adoption, regulatory blessing.