What would break in your opinion? I, like many, have 99% of my net worth in diversified index funds. When I researched the topic, I came up with the two following considerations that seems to be in agreement with the general thinking of everyone who has not a very strong interest against indexing (e.g. many portfolio managers and investment advisors):
- If everybody keeps indexing, at some point doing active trading will become so profitable that there will be a partial reversion of some indexers, so in other words it’s a self correcting feedback loop like many other economical phenomenas.
- Index funds will be nearly bullet proof _if_ the capitalistic machine that powers our domestic and global economy will continue to overall thrive, with increasing population/consumption and/or increasing productivity. This one in my opinion is the real threat, considering how horribly we are treating our natural habitat these days.
