Not the op but I wish downvoters would comment giving their reasons. I remember seeing something about this in the atlantic a while back, and it would be good to know if/why it's a bad argument.
Not a downvoter (nor a financial expert) but to check the argument seems at least reasonable to check whether the proportional return of Vanguard funds has decreased as the fractional amount of money invested with them vs. the total stock market has increased. Seems unlikely the answer is yes (probably because in fact you are not investing in "nothing" -- there's value in having money itself, same as interest at a bank, and you are investing in giving that money to lots of companies, not just one, and that's what you're making profit off of. So long as money generates money, why should the return taper off?)
Probably an interesting number itself knowing what the fractional amount of money flowing through Vanguard is as a proportion of the total.
I bet skeptics would say that if you steer people away from index funds, then they may put it in high fee active index funds that generate about the same return as the passive index funds.
Personally, I think that as more people put their money into index funds, active funds may look more attractive as they can potentially exploit market misprices quicker than passive funds can, but that's just me.
There's this weird social energy surrounding index funds that's very aggressive about preaching that they're the only viable option and that everything else is ridiculous. To be honest, this energy is another input that increases my skepticism of the whole thing. These days, whenever you see an argument downvoted instead of rebutted, there's likely something to it.
I think voting can mean different things to different people.
Some people upvote or downvote because they agree or disagree. They view it as a "vote" for the opinion.
Others upvote or downvote because they thing the argument is strong or weak, or maybe because someone said something nice and positive to another person or someone said something mean or hostile to another person.
I didn't downvote the earlier comment (and wouldn't as I'm quite clueless about financial matters), but felt the need to downvote another comment in an unrelated article recently. There I noticed, that once I applied the downvote, I couldn't see the comment being downvoted anymore. I meant to reply then to that comment on why I downvoted the comment, but couldn't anymore. I guess, that's the reason why one sees here so many downvotes by anonymous cowards.
Ever since Vanguard started there has been a constant barrage of anti index fund propaganda in the US.
One of the early slurs was that index funds were communism (pretty daft, but probably effective in the US). The latest is this scaremongering "what if all investment were into index funds" (answered several times in this thread).
From the perspective of index fund advocates, unsophisticated investors are systematically getting ripped off and the daft propaganda only adds to the offense.
This is probably why you're picking up an aggressive preachy vibe from advocates.
The empirical data is however unambiguous and there is now a lot of it.
Index funds allow amateurs to make money without losing it to "competent" active fund managers. That's all there is to it. You might not understand how many middlemen insert themselves between the amateurs because you're not one of them.
