Markets don't work if everyone is passive

When it takes extensive research to even have a fighting chance of outperforming the market, it's no wonder that many people are opting for passive alternatives instead. As money pours out of actively managed funds into passive, or index, funds, it's not crazy to imagine that we may enter a world where there'll be an insufficient number of people doing independent research, leading almost everyone interpreting events the same way. And as a consequence, there'd be limited liquidity because everyone would want to buy and sell at the same time.

Markets only work if people are interested in being on both sides. But, for that to happen, people need to have opposite opinions about whether prices are an accurate reflection of the economic reality. We need people to refuse to accept prices as given by indices or markets will fail.