Critics of index investing always overlook the fact that there are many different indexes out there. The criticism always hypothesizes that everyone will put th

Critics of index investing always overlook the fact that there are many different indexes out there. The criticism always hypothesizes that everyone will put their money in an S&P 500 or a total stock market fund, while the reality is that indexers do all sorts of slicing and dicing with their index funds. By reading just a few posts at the bogleheads.org forum one will quickly see that a ton of people overweight small caps and value stocks (and often the combination of those two factors, small cap value stocks). Some use an S&P 500 index, some use total market. Some hold international indexes (in their different flavors too - developed markets, emerging markets, total intl market, intl value stocks, etc.). Some overweight REITs in their portfolios. The combinations are infinite. I personally believe that even if everyone indexes we'd still see significant activity in the market because not everyone indexes the same way. Also, a lot of indexers like to dedicate a portion of their portfolios to active investing once they reach a certain net worth - I myself plan on doing so. The bottomline is that criticisms of indexing are either made out of ignorance or fear, or they have an ulterior motive behind them (such as promoting a firm's actively managed mutual funds).