Index funds, by simple math, return exactly the average of the market with less fees, so they are strictly better than the average managed money which returns t

Index funds, by simple math, return exactly the average of the market with less fees, so they are strictly better than the average managed money which returns the same with more fees: https://web.stanford.edu/~wfsharpe/art/active/active.htm https://web.stanford.edu/~wfsharpe/art/active/active.htm And your ideas of picking 3 stocks + small cap is just that, an active bet that deviates from the market composition. Unless you've gone back on your conclusion that you're not Peter Lynch it's probably not much of a path. The only risk of rising index fund usage is that the market will cease being efficient. The way I see it is if that starts happening strongly (and it will take a lot more indexing than currently exists) first the market will become more volatile because price discovery will be worse with less people making bets. Then at some point if there are too few active investors indexing will become less viable because it will be easier for active investors to "steal" money from indexers by trading ahead of them and using other advantages over someone that's just buying and holding. This will make the index fund deviate from the index itself and it becomes unusable. I find these scenarios extremely unlikely because of the "Intelligent Investor" crowd you mention. There is indeed a premium paid to people that bring actual good information to the market. Buffett and others like him still make a lot of money, everyone else gets to ride along the efficient market they create. Buffett by the way recomends index funds. I'd love a reasonable contrarian view on this though. Most I've seen are just fund managers trying to justify their unjustifiable fees that create no value.