You're talking to the wrong people. The idea isn't that all investors should be index investing, the idea is that all investors without special expertise shoul

You're talking to the wrong people. The idea isn't that all investors should be index investing, the idea is that all investors without special expertise should be index investing. This is a non-trivial statement because one might think (and people often argue) that active managers with expertise can beat indices, and therefore unsophisticated investors should just hire those people. The problem with this is that unsophisticated investors can't tell the difference between active managers who have a real edge (be it special insight, better computers, bigger brains, etc.) and those who do not. Insofar as an active manager can demonstrate convincingly to an unsophisticated outsider that they have an edge, the manager will be able to capture the excess value by commanding larger fees in the marketplace for managers. This would be a fine equilibrium for wise unsophisticated investors, but unsophisticated investors are not all wise. Various human biases and market failures mean that there are an excess number of active investors (i.e., a number above the equilibrium value in an efficient market), many/most of whom are leeches. This is the state we find ourselves in today. The reason the number of active managers is decreasing is because wisdom is diffusing, but we are not done. It goes without saying that "special expertise" involves a lot more than reading financial newspapers and considering yourself a smart person. It's about as hard to be able to compete at that level as it is to compete in professional sports. The big difference is that the heavy dose of randomness involved in investing allows more people to convince themselves that they are able to compete with the big boys, when almost none of them are. (The evidence that you can't compete with LeBron James at basketball is harder to ignore.)