Really depends on what indexing implies. If you're talking about a world where everyone trades actively but instead of trading individual companies they only t

Really depends on what indexing implies. If you're talking about a world where everyone trades actively but instead of trading individual companies they only trade broad index funds then, yes, swings in the market would be amplified. Although in that world you would imagine that there would be a lot of alpha to be picked off by smart traders and so that should counteract the "dumb money" actively trading indexers. If indexing also implies passive/"set and forget"-style trading then you would actually dampen market swings. You'd have fewer people selling as the market tanked and fewer people buying the big rallies.