I'm confused, why is this posted four years after it was written? Is it to say OP was proven correct or incorrect? I'm assuming incorrect given the great performance of index funds in the last three years, but it's hard to tell because the market remained in sell-off mode into 2009.

Anyway, I mostly disagree with OP. While I am not a firm believer in the efficient market hypothesis, I think it is very close. Index funds reflect the 'crowd-sourced' research from many very smart investors who have a lot on the line. I am 100% sure their combined research is more accurate than what I am willing to do in a few hours a month of my free time. Index funds are basically what give me the confidence I can safely invest my money into a large part of the American/World economy at a fair rate.