I don't think your idea is nuts at all. I see the TLDR of this article as (quoted from the article) "...active management has positive externalities, and if no

I don't think your idea is nuts at all. I see the TLDR of this article as (quoted from the article) "...active management has positive externalities, and if no one will pay for it, those benefits will disappear." It probably contributes to poor corporate governance. The more your shareholders don't even bother to vote their proxies or even think or read about them, the easier it is for management to gradually evolve into caring more about padding their position and making short term results look good than catering to long term shareholders It's a bit of a free-rider problem -- as long as there's enough active shareholders, passive shareholders can get a free ride and profit from the (averaged) wisdom of the active ones without paying for it in time/effort. But if that keeps growing, eventually the active shareholders who care are a minority in the company, and at that point management is incentivized to ignore the minority that cares and just "appease Wall Street", ie do whatever gives short term stock boosts. > And if most people are only investing in the S&P 500 or Large Blend funds BTW, IIRC, the largest firms are so large that most of the market by market cap consists of the largest few, so investing in just large cap vs investing in the total market is close to the same -- you have to manually skew towards medium and small if you don't want them to be negligible in your portfolio.