I don’t disagree with your basic idea, but not being able to articulate alternatives so that you know when they make sense is going to hurt you.
We are possibly seeing a major failure mode for passive for the first time.
There’s a lot of advocacy for passive investing because it’s practically the only good option for retail investors. Managed funds can actually afford to advertise.
There are problems with passive investing becoming such a large portion of public investment, it is practically corporate welfare. But when the alternatives are at or around 2 and 20, with most performing worse than index funds, it’s irrational for the average person to do anything but passive investing.
> because it’s practically the only good option for retail investors.
If you’re hearing about something, it’s because someone organized that message
> Managed funds can actually afford to advertise.
Have you seen how much money and corporate influence Vanguard and black rock have?
> with most performing worse than index funds
At the same risk level?
If it's the first time it's failing then there's really nothing anyone can do to prepare for it, and I certainly wouldn't recommend laypeople to try to time the market.
In this story we determined that S&P is going to choose a path different that other ETFs. Does that mean these ETFs differ in quality? Which should you pick?
Mutual funds aren't bad but the average person won't realize that they're paying a percentage of their assets, not a flat fee, to the manager. If the fund class can beat the market by more than that percentage then it could be worth it, otherwise pick an ETF that has the risk profile you can tolerate. But the first step would be to understand that.