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Comment by rhombocombus | Hacker News Reader

While this is true, there is a lot of value in individual investors investing in index funds, and their performance has borne that out. I don't think that individual investment is going anywhere any time soon. For an investment product that is stable and has more distributed risk, however, index investment can't really be beaten, or rather it hasn't been beaten yet.

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It's chicken or egg: index funds are successful because people invest in index funds, therefore index funds are...

There will be an inflection point where stocks in indexes are so overvalued that enough active investors (and passive defectors) cause a rebalancing. If they're overvalued enough, and enough of the general market participates in them, index funds could easily crash.

Apps like Robinhood are making active investing much more feasible for your average Main Street person. I certainly am not counting on the continued blind investment in index funds.

> It's chicken or egg: index funds are successful because people invest in index funds, therefore index funds are...

This presumes that the only reason stocks are in the index is because of index investors, which is not the case.

Free riders. And there's good reason to believe that the future of investment will not have a group of corporate governors to free ride off of going forward.

They're not free riders, they pay the price of buying goods at slightly wrong prices. That small whale tax funds the behavior of the sharks.

Could you elaborate on that reason?

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