It's strange to me that the "prudent"/"rational" thing to do as a retail investor is to park your money in index funds/ETFs. I don't doubt that it works, but I

It's strange to me that the "prudent"/"rational" thing to do as a retail investor is to park your money in index funds/ETFs. I don't doubt that it works, but I wonder why. To me, it's totally irrational. By virtue of being included on an index, a stock spikes in trading volume as all the index funds/ETFs adjust to include it; vice versa if it ever gets removed. These transactions aren't free, in fact the simultaneous dumping/buying of the affected stock serves to drive the price further in the favor of sellers or buyers (i.e, not you). And none of that money is coming from rational investors, it's coming from people with no understanding of the stock market blindly parking their money in index investments, which then blindly spew it across a bunch of blue-chip stocks. So it seems to me like any stock that's part of an index/benchmark is being inflated by index funds. But as long as people buy into the idea of index investing as smart investing, there's no way to bet against it. Sounds vaguely bubbly to me.