"My concern is that if everyone is in the passive investing boat then we're no longer following the market, we're making the market, and it's a big departure fr

"My concern is that if everyone is in the passive investing boat then we're no longer following the market, we're making the market, and it's a big departure from the philosophical under-pinnings behind the idea of passive investing." I'm intrigued by your suspicion ... but I can't put my finger on the exact manner that this might play out ... it's really hazy. It seems to me that the effect of everyones money going into index funds would be that firms large enough to be in the index would have less and less pressure to issue dividends ... if there is a ready market of buyers of your stock based solely on your size then why bother ? If money flows, by autopilot, into an asset class wouldn't we expect that asset class to return less and less as time goes on ?