Comparing equal- and value-weighted portfolios

I think weighting based on fundamental measures such as earnings, sales, or book value makes more sense. "Fundamental indexing" has been studied, and there are ETFs for it.

Here is a problem with equal weighting. Suppose you equally weighted stocks, and two of your companies merged. To maintain an equal weighting in all stocks you would have to sell half your position in the newly created company, which does not make sense.