On individual scale it is effective investment tool. When too large part of investment is passive, it distorts the price discovery. Prices move higher, because

On individual scale it is effective investment tool. When too large part of investment is passive, it distorts the price discovery. Prices move higher, because they move higher... It works until it does not. Essentially more money gets poured in higher the fraction of total market cap is. And same if when something drops in market cap. Which in some scenarios clearly can mean not optimal distribution of value. Albeit it does looks like great "wealth" generation if you get to sell on the way up or at top.